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Arab American entrepreneurship in Detroit, Michigan.

Abstract

Purpose--The purpose of this paper is to examine the pathways to success of Arab American entrepreneurs in the Detroit Metropolitan Area, and how Arab American businesses impact the local Detroit economy.

Design/methodology/approach--The authors conducted extensive search of literature and in-depth interviews with experts, entrepreneurs, CEOs and other senior executives of two large Arab and Chaldean community organizations. In addition, the authors also conducted site visits at community centers and the Seven Mile project in Detroit and Dearborn, Michigan.

Findings--The authors discovered several pathways to success important to Arab American entrepreneurship: start-up capital provided by families and friends, training and education, support networks and support organizations in Detroit. In addition, some organizations, local churches and mosques have provided many essential services needed by new Arab American entrepreneurs. The authors found that the theory of middleman minority and the enclave economy theory provide very useful explanations for the phenomenon of Arab American entrepreneurship in Detroit. However, the natural business incubator model, first developed by Greene and Butler, best explains the success story of Arab American entrepreneurs in Detroit, Michigan.

Originality/value--The paper identifies some important pathways to the success of Arab entrepreneurship in Detroit, Michigan. The authors expand the natural business incubator model first developed by Greene and Butler by including the names of local organizations that play active roles in assisting Arab entrepreneurs in Detroit and Dearborn, Michigan.

Keywords United States of America, Entrepreneurialism, Immigrants, Business formation, Arab American entrepreneurs, Immigrant and minority entrepreneurship, Business incubator model

Paper type Research paper

Introduction

The focus of this paper is on ethnic entrepreneurship and Arab American entrepreneurship. Ethnic entrepreneurship has been very beneficial for immigrants and for the economies in which they settle. Ethnic entrepreneurship has been defined as "a set of connections and regular patterns of interaction among people sharing common national background or migration experiences" (Waldinger et al., 1990b). In this paper, we use the term "Arab American entrepreneurs" to describe Arabs who have immigrated to the USA and who own and operate businesses in the Detroit metropolitan area. We also include the descendants of these immigrants who have continued to own and operate the family business. Since most of these Arab entrepreneurs are American citizens (Kayyali, 2006), we refer to them as Arab Americans.

According to Evans (1989), entrepreneurship is perhaps the most important factor in determining whether immigrant groups achieve economic success in an industrial society like the USA. In the past, researchers have studied issues related to immigrant and ethnic minority entrepreneurship in the USA. Waldinger and Aldrich (1990) concluded that:
   [...] small enterprise played an important role in the economic
   progress of a variety of immigrant groups--Jews, Italians, Greeks,
   and others--and their proportionally higher involvement in
   entrepreneurial activities continues to differentiate these groups
   from much of the population.


In this paper, we examine Arab American entrepreneurs in and around Detroit, Michigan. Our goal is to identify and explore their success factors and their contributions to the local economy. We first discuss contextual factors that provide the background necessary for our analysis. These contextual factors include defining who is an Arab, describing the history of Arab immigration to Detroit, providing a profile of today's Arab Americans, and discussing the economic environment of Detroit, Michigan. Following the contextual discussion, we review relevant literature, present research questions, discuss the research methodology, results and conclusion.

Who is an Arab?

Because of widely held misconceptions, we cannot begin a discussion about Arab immigrants without first defining the term "Arab." This term commonly refers to Semitic, Arabic-speaking people from the Arabian Peninsula, the Middle East, and North Africa. Specifically, the 22 Arab countries include nine in Africa (Mauritania, Morocco, Algeria, Tunisia, Libya, Egypt, Sudan, Somalia, Comoros Islands) and 13 in Asia (Lebanon, Palestine, Syria, Iraq, Jordon, Kuwait, Bahrain, Qatar, Saudi Arabia, United Arab Emirates, Oman, Yemen, Djibouti). The language, history and culture of these countries give them a shared Arab identity. Arabic is the native language of the majority of people living in the Arab World. Arabs are often confused with Persians, who originated from Persia and still live in the area known as Iran. It is also important to note that while many Americans use the terms Arab and Muslim interchangeably, they are not the same. Muslims are followers of the religion of Islam and most of them are not Arabs. Most Arabs are Muslims, but a great number of Arabs are Christian and Jewish. Large numbers of Arab Christians still live in Lebanon, Syria, Jordan, Iraq, and the Palestinian Territories. There are also some Arab Jewish communities in Egypt, Morocco, Lebanon and Syria.

Arab immigration to Detroit

The story of Arab immigration to the USA is commonly described in terms of three waves (Suleiman, 1999; Hassoun, 2005; Kayyali, 2006). The first wave of immigrants, mostly Christians and Chaldeans from Lebanon, Syria and Palestine, came between 1880 and 1925. These immigrants were motivated primarily for financial reasons, although they were also motivated by conflict and tensions between Christians, Muslims and Druze. During this period, it was common for the Arab immigrants to operate as peddlers and eventually to own grocery stores. According to folklore, in the early 1900s, Henry Ford invited a Yemeni sailor to work for five dollars a day, a standard wage for work in Ford's factory located in Dearborn, Michigan. This started a chain reaction that resulted in Yemeni coming to Michigan for employment in the automobile plants. A large population of Arab immigrants worked in the famous Ford Rouge Plant in Dearborn, Michigan and many settled nearby in the "south end" of Dearborn. By 1925 it is estimated that 200,000 Arabs were living in the USA.

The second wave, between 1925 and 1965, saw only 80,000 Arab newcomers because of legal immigration restrictions imposed by the Immigration and Naturalization Act of 1924 which excluded nearly all non-European populations. Arab immigrants who came to America in the second wave were much more diverse than their counterparts in the first wave. Whereas the first-wave immigrants came almost exclusively from the area of Greater Syria (a term that includes the present-day countries of Syria, Lebanon, Israel, Jordan, the Palestinian Territories and some parts of Iraq), the second-wave immigrants came from all parts of the Arab world, including North Africa (Suleiman, 1999). The first-wave arrivals were predominantly Christian while the immigrants in the second wave included both Christians and Muslims.

Arab immigrants who came after 1965 are considered part of the third wave. Many were professionals from influential urban families (Kayyali, 2006; Orfalea, 2006). A change in immigration laws allowed many more Arabs to immigrate to the USA. This third wave was largely influenced by conflicts and wars, most notably the Six Day War in 1967, and the two US Gulf Wars in 1990 and 2003, respectively. According to the US Census Bureau, the Arab American population increased by nearly 40 percent during the 1990s. Between 1967 and 2003 over 750,000 Arabs, mostly Muslim, came to the USA from different countries (Orfalea, 2006). As a result of the ongoing conflicts, Arab immigration continued after 2003. For example, the USA admitted 14,000 and 19,000 Iraqi refugees for 2008 and 2009, respectively.

Today's Arab Americans

Lebanese are the greatest number of Arabs living in the USA, followed by Egyptians and then Syrians. According to the US Census, the US Arab American population increased from 1.2 million, approximately 0.4 percent of the population in 2000 to 1.5 million or 0.5 percent of the population in 2008. Zogby International, a consulting firm whose work includes statistical analyses of Arab American populations, argues that the Census data is greatly understated because of the methods used. Zogby instead estimates the US Arab American population in 2008 at 3.2 million with 490,000 residing in Michigan (Zogby International, 2003). Michigan's total population is 9.9 million. Only 5.8 percent of Michigan's population is foreign born, relatively less than the national average of 12.5 percent (Ballard, 2010).

Our interviews revealed that Arab Americans tend to live in specific areas in and around Detroit. Many live in the city of Dearborn that shares a southwest border with Detroit, and where one-third of the citizens have Middle Eastern ancestry. Others live nearby in the area of Detroit that borders Dearborn. Arab American engineers reside in the northern suburbs of Troy and Warren, near engineering firms. A large number of wealthy Arab families live in Grosse Pointe. Arabs who are Palestinian Christians live in Livonia, while wealthier Palestinians have settled in the northern suburbs. Other, sometimes less prosperous Arab Americans, live in the Seven Mile Woodward area of Detroit. Detroit is a preferred destination for new Arab immigrants. For example, in spite of efforts by the USA to relocate more recent Iraqi immigrants to other US cities, many Iraqis have relocated to Detroit. Figure 1 shows a map of Detroit.

Recent generations of Arabs include both entrepreneurs and professionals. The US Census data describes Arabs as younger and better educated than the general American population (Sehopmeyer, 2000). Many Arabs have achieved professional success in medicine, science and entertainment. Famous Arab Americans include former US Senators George Mitchell and Spencer Abraham, former Secretary of Health and Human Services Donna Shalala and former Green Party presidential candidate Ralph Nader. However, Arab entrepreneurs in Detroit are not known for their professional achievements. Instead, they are mostly known for owning gas stations and convenience stores. By some estimates, 90 percent of the stores and gas stations in the Detroit metropolitan area are owned by Arab immigrant entrepreneurs (Ghosh, 2010). Although the majority of Arabs pursue other vocations, the store owner is the public face of the Detroit area.

[FIGURE 1 OMITTED]

Arabs in America enjoyed steady progress until September 11, 2001. The terrorist attack on America by Muslim extremists on that day resulted in anger, scrutiny and at times discrimination against Arabs. In the first nine weeks following the attack, over 700 incidents of hate crimes were committed against those perceived to be Muslim, Arab, or Arab American. Arab American stores were looted and the fear of Arabs led to a decline and shutdown of many Arab-owned small businesses. Moreover, employment discrimination against Arab Americans was documented in over 800 cases. New immigration policies resulted in increased monitoring, screening and deportations of Arabs and others of Middle Eastern descent. Public figures, including some members of Congress, gave hostile commentary in the media against Muslims (Ibish, 2002). This level of discrimination significantly affected Arab immigrants and most certainly affected their businesses as well. The aftermath of September 11, along with the worldwide economic recession hampered the progress of Arab American business ventures.

Economic environment of Detroit Michigan

According to the 2010 Census, Detroit is the largest city in the state of Michigan and is the 18th largest city in the USA in terms of population. It is located in southeast Michigan on the Detroit River and the southernmost border between the USA and Canada. A map of the metropolitan area of Detroit is shown in Figure 1. When the first wave of Arab immigrants arrived in Detroit, the American automobile industry was beginning to take off. The success of this industry made Detroit, Michigan a powerful economic force, and Detroit became known as the automotive capital of the world. While Detroit is still a major economic force, the city has lost a great deal of the market share of the auto industry. This loss has resulted in economic struggles for both the city of Detroit and the state of Michigan.

Massive job losses in the American auto industry, a national economic recession and crisis in the financial industry resulted in increased poverty, housing foreclosures, and a declining population in Detroit. Recent stories of Detroit have been documented in Okrent (2009), and Austin and Doerr (2010). In 2010, the city of Detroit had a budget deficit of $155 million and the Detroit Public School system was being managed by an emergency financial manager appointed by the State of Michigan. The 2010 US Census figures released in March 2011 indicate that the population of the city of Detroit had plunged 25 percent between 2000 and 2010 (Wisely and Spangler, 2011). American auto companies and their suppliers closed plants in 2008 and eliminated more than 330,000 jobs from 2008 to early 2009 (Vlasic, 2010). In 2009, both General Motors (GM) and Chrysler declared Chapter 11 bankruptcy.

To prevent a total collapse of GM, the US and Canadian governments injected about $49 billion in 2009 to stabilize the company and helped the company to restructure and survive (Dash and Schwartz, 2010). Chrysler also received financial assistance from the US and Canadian governments. In early 2009, Fiat took over the management of Chrysler, and Sergio Marchionne, the CEO of Fiat, was also the CEO of Chrysler. In the summer of 2009, and into 2010, as GM and Chrysler emerged from bankruptcy, the Michigan economy gradually improved. In the first three months of 2011, US auto unit sales totaled 3,059,805, representing an increase of 20.2 percent over the same period of 2010. In 2010, Ford and GM were profitable, and Chrysler was hiring new workers again. Additionally, Ford reported a first quarter profit in 2011 of $2.8 billion, its best in 13 years. On April 21, 2011, Fiat announced a plan to increase its stake in Chrysler to 46 percent from 30 percent by investing an additional $1.27 billion (Shepardson and Priddle, 2011). In July 2011, Fiat increased its stake in Chrysler to 53.5 percent after buying out the stakes from the US and Canadian governments. Detroit still has a long way to go to recover from its economic losses. In July 2011, the rate of unemployment for the Detroit metropolitan area was 14.1 percent, substantially higher than the national average rate (9.1 percent) and the Michigan rate of unemployment of 10.9 percent in the same month.

Several ideas have been proposed to improve public services and the economic condition in Detroit. For example, some Detroit city planning officials have tried to identify the neighborhoods with the brightest outlook meriting the city's full resources and services (Dolan, 2010) and intend to make these primary residential areas. Providing an optimistic analysis, Gallagher (2010) notes that many great cities are smaller than Detroit and shrinkage is not necessarily negative. He discussed positive ideas for reimagining Detroit including urban agriculture, more greenways, bicycle lanes and community gardens. Some urban planners and entrepreneurs believed that entrepreneurship along with unique training approaches could provide economic strength to the area and revive Detroit (Ryckman, 2010). Levenstein (2004) pointed out that "entrepreneurship plays a crucial role in economic growth, both in society at large and within specific communities." In a study of Michigan's economic future, Ballard (2010) emphasized the critical role of highly skilled entrepreneurial people and the importance of education and training for Michigan. Ballard (2010) also suggested that the State of Michigan should reverse the trend toward reduced state support for community colleges and universities.

Arab American immigrant populations have been a significant factor in Detroit's economic revival. They have been responsible for the creation of business ventures in Detroit and the nearby city of Dearborn (Suleiman, 1999; Hassoun, 2005; Ghosh, 2010). Yet, the pattern of success for Arab Americans has received little attention from researchers. Therefore, the focus of this paper is to examine the pathways to success of Arab American businesses, the unique organizations that support them, and how they impact the local Detroit economy. Their narrative provides insight into not only the benefits of immigration, but also the factors that enable successful entrepreneurship. Specifically, our research questions are:

RQ1. What are the pathways to success of Arab American businesses in the Detroit metropolitan area?

RQ2. How do Arab American immigrants and their businesses impact the local Detroit economy?

In the following section we will review literature on immigrant and ethnic entrepreneurship, Arab entrepreneurs and Arab entrepreneurship in the Detroit metropolitan area.

Literature review

In this section, we will review literature related to the following two areas:

(1) Immigrant and ethnic minority entrepreneurship and

(2) Arab American entrepreneurs and Arab entrepreneurship.

While there are many research studies on immigrant and ethnic minority entrepreneurship, there are only a handful of studies of Arab entrepreneurship and Arab American entrepreneurs.

Immigrant and ethnic minority entrepreneurship

Waldinger and Aldrich (1990) noted that the self-employment rate varied among different ethnic immigrant groups. Based on the data of 272 American metropolitan areas between 1970 and 1980, Light and Rosenstein (1995) observed that "because immigrants have a higher rate of self-employment than do native workers, they increase the aggregate level of self-employment in the nonfarm economy." Light and Rosenstein (1995) also found no evidence that "the rate of money returns earned by immigrant entrepreneurs had any effect upon native blacks, presumably the most vulnerable to foreign competition of any population segment".

Fairlie and Robb (2008) provided a comprehensive comparative analysis of the performance of African American, Asian American, and white-owned businesses in the USA. They tried to explain the relative success of Asian-owned businesses and the relative underperformance of black-owned businesses. The most important factor in the higher survival rates, profits, employment, and sales of Asian-owned firms is that Asian Americans invest more stamp capital in their firms than whites or African Americans. Another factor includes higher levels of education among Asian American business owners because about half of them are college educated. Fairlie and Robb (2008) noted that "the relative lack of success among black-owned businesses is attributable in part to owners who have less startup capital, disadvantaged family backgrounds, and less education." In a study of racial differences in self-employment propensities and incomes, Borjas and Bronars (1989) found that "the gains to self-employment for able minorities are relatively smaller than the gains to self-employment for able whites." As a result, minorities have lower incentives to become self-employed, and minorities are "more likely than whites to be negatively selected into self-employment".

Valdez (2011) went beyond the classic theories and investigated the effect of multiple dimensions of identity on ethnic entrepreneurship. She found that certain entrepreneurial groups experience far lower economic returns than others. Rather than viewing ethnicity as a single construct, Valdez examined the interrelationship between the classifications of class, gender, and race, and how this interrelationship explains differences in outcomes among and within ethnic groups. The consequence of these classifications is a social structure which controls social location and results in an unequal starting position of members of the same ethnic identity. Social structure interacts with agency, the ability of the group to mobilize social capital, and creates an "embedded market" that determines the product of entrepreneurial efforts. Valdez demonstrates that members of the same ethnic group have unequal resources and support, and therefore have different outcomes. Because they have significantly better access to social capital and ethnic resources, men are considerably more successful than women, and the middle class are much more successful than the poor.

Race is also a significant factor in shaping entrepreneurial outcomes. In general, entrepreneurs who self-identify themselves as part of an ethnic group all tend to report the use of ethnic based social capital. This includes Black and White entrepreneurs who could, for example, identify themselves as Caribbean or Italian. Valdez compared Latinos/as, White, and Black entrepreneurs and notes that America has an embedded racial hierarchy where Whites are higher than Latinos/as, and Latinos/as are higher than Blacks. According to Valdez, in "the racialized social structure [...] the imposition of race is always required--it is not an option." She finds that both motivation and experience of business ownership differ between races, and that Blacks are disenfranchised and do not have the advantages that enable White and Latino/a men to pursue profits enjoyment from their entrepreneurial efforts.

After studying many cases, Boissevain et al. (1990) listed seven common business problems that confront ethnic entrepreneurs:

(1) How to acquire the information needed for the establishment and survival of the firm?

(2) How to obtain the capital needed to establish or to expand the business?

(3) How to acquire the training and skills needed to run a small business?

(4) How to recruit and manage efficient, honest, and low-wage workers?

(5) How to manage relations with customers and suppliers?

(6) How to survive strenuous business competition?

(7) How to protect themselves from political attacks?

Boissevain et al. (1990) also discussed many different strategies ethnic entrepreneurs use to deal with those seven common problems.

Greene and Butler (2004) examined two methods of business implementation:

(1) the formal business incubator; and

(2) a minority business community.

The first general business incubator method was obtained from a review of business literature, while the second method was the result of a case study of the Ismaili Pakistani community in a midsized Southwestern city in the USA. According to Allen and McCluskey (1990):
   [...] formal business incubators are designed to provide a
   nurturing environment, furnishing essential space, business
   assistance and support services that are crucial to the survival of
   the small business, especially during the initial stages of
   development.


After an in-depth study of the Ismaili Pakistani community in the Southwestern city, Greene and Butler (2004) developed the natural business incubator model as shown in Figure 2.

A number of authors have provided three theoretical arguments to explain immigrant and ethnic minority entrepreneurship in the USA. These theories (or models) are the theory of middleman minorities, the theory of ethnic market niches, and the ethnic enclave theory. For example, Bonacich (1972) provided a theory of middleman minorities to explain the phenomenon in Asian entrepreneurship in some American cities. Bonacich (1972) explained that the sojourning orientation of immigrants, reacting with their marginal status as foreigners in the US, led them into businesses that allowed them to avoid direct competition with native majority group members. In order to survive, these immigrants are inclined to set up small businesses in areas where money can be raised quickly and businesses may be acquired cheaply and with minimum competition. Many poor minority neighborhoods would be ideal locations for those immigrants to profit from sales to the underprivileged and underserved. As those immigrant entrepreneurs encounter hostility in the neighborhood, they will band together to defend themselves, leading to greater cooperation and stronger institutional support. Zhou (2004) found that Bonacich's middleman-minority theory seems to fit some Chinese business operations (such as fast-food takeout restaurants), and many Korean businesses (grocery and liquor stores) in minority neighborhoods.

[FIGURE 2 OMITTED]

As explained by Waldinger and Aldrich (1990) and Zhou (2004), there are three basic elements for the theoretical viewpoint of market niches:

(1) opportunity structure;

(2) group characteristics; and

(3) ethnic strategies.

Opportunity structures are the economic opportunities presented to the immigrant entrepreneurs in an ethnic community. That community provides a demand for goods and services that immigrant businesses are uniquely qualified to provide because the entrepreneurs know the taste and buying preferences brought from their homeland. These ethnic market niches are mostly in labor-intensive, low-profit businesses that are shunned by American mainstream businesses. Group characteristics pertaining to ethnic entrepreneurship include financial capital, human capital, and social capital (Zhou, 2004). Immigrant entrepreneurs can normally raise the small amount of financial capital needed for their small businesses from their family members and the ethnic community. Ethnic strategies encourage those entrepreneurs to also use the low-cost labor available in the ethnic community and utilize the social network and social capital available in the community.

The ethnic enclave economy theory (model) goes beyond the middleman-minority theory and the ethnic market-niche model to focus on the implication and social consequences of ethnic entrepreneurship on immigrant adaptation (Portes, 1987; Zhou, 2004). An enclave is a spatial concentration of ethnic firms with a wide variety of economic activities. Bounded solidarity and mutual trust enable employers in the ethnic enclaves (e.g. Cubans in the Miami area) to demand greater discipline and loyalty from their co-ethnic workers. In return, these workers will receive preferential treatment from employers in terms of promotions, business training, and other benefits. The economic enclave provides co-ethnic members with privileged access to a particular supply of materials and goods, and to a low-wage and reliable co-ethnic workforce (Portes, 1987; Zhou, 2004).

Arab American entrepreneurs and Arab entrepreneurship

In the past, many studies have been done on ethnic minority entrepreneurship that focus on Koreans, Jews, Chinese, Cubans, and African Americans (Waldinger et al., 1990b; Light and Rosenstein, 1995; Park, 1997; Yoon, 1997; Butler and Kozmetsky, 2004; Min, 2008; Dana, 2007; Fairlie and Robb, 2008). However, Arab American entrepreneurship remains an area that is under-studied and under-documented (Omar, 2009). Most of the studies available to date on Arab American entrepreneurs and Arab entrepreneurship are case studies (David, 2000; Abdulrahim, 2009; Omar, 2009). Based on the 1990 census data, El-Bradry (2004) provided a profile of Arab American entrepreneurs in the early 1990s. David (2000) explained two phases of the history of store ownership by Arab Americans (especially the Syrian-Lebanese) in Metropolitan Detroit. In the first phase, Syrian and Lebanese immigrants opened grocery stores and other shops near the neighborhoods where they settled. These areas included the East Congress and Mt Elliot communities in Detroit. The second phase of store ownership began when the Syrian-Lebanese started leaving their stores for other business opportunities and professional careers (David, 2000). This move created opportunities for Iraqi Chaldean immigrants to enter store ownership in Detroit. As more Chaldeans came to Detroit in the 1970s and 1980s, they began buying and establishing a large number of grocery and convenience stores. By the mid-1990s, informal estimates suggested that 80-90 percent of Detroit's independently owned grocery and liquor stores were run by Chaldean immigrants and other Arab Americans (David, 2000).

Abdulrahim (2009) studied cases of Lebanese immigrants and how they built and operated their small businesses in Detroit and Dearborn. Lebanese immigrants own many gas stations in the city of Detroit and the overwhelming majority of ethnic businesses in Dearborn. Abdulrahim (2009) also presented the immigration and employment histories of three Lebanese immigrants in her studies.

Omar (2009) examined the cultural experiences of Arab American entrepreneurs living in south Texas. Data were collected through open-ended interviews with those entrepreneurs. Omar (2009) found that acculturation and cultural adjustments were necessary for those entrepreneurs' successes in the business world, but assimilation was not.

Research methods

This study uses several research methods to gather background and current information. These methods include an extensive search of literature, in-depth interviews with experienced and well-known authors in the Arab American community, CEOs and other senior executives of two large Arab and Chaldean community organizations, and site visits at community centers in Detroit and Dearborn. We also visited the Arab American Museum in Dearborn and spoke with entrepreneurs in Dearborn and Detroit.

The search of literature includes published papers and documents, and those available online on the following topics: Immigrants and minority entrepreneurship, Arab ethnic communities in America, Arab immigrant history in the Detroit area, and Arab American entrepreneurs and their contributions to the Detroit and Michigan economies. Our interviewees included Professor Rosina J. Hassoun at Michigan State University. Dr Hassoun authored the book Arab Americans in Michigan, published in 2005. She has also published many other articles related to the Arab community in Detroit and other cities in Michigan (Hassoun, 1995, 1999, 2001). We also consulted with additional Middle Eastern scholars at two other Michigan universities. In-depth interviews were conducted with the CEO, the President of the Arab American and Chaldean Council (AAC), and the Managing Director and Communication Director of the Arab Community Center for Economic and Social Services (ACCESS). Site visits included the community center and the Seven Mile Project of AAC and the community center facilities of ACCESS (2009). We also studied the websites of these organizations and others including the Arab American Chamber of Commerce (AACC), Arab American National Museum, Chaldean American Chamber of Commerce (CACC), and Arab American Institute. Selected entrepreneurs in Detroit and Dearborn were also interviewed. After the first draft of the paper was done, the findings were reviewed by selected interviewees to confirm the accuracy of facts and events. The findings and analyses are discussed in the next section.

Findings and analysis

Pathways to success for Arab American entrepreneurs The first research question is:

RQ1. What are the pathways to success for Arab American businesses in the Detroit metropolitan area?

From our interviews with Arab American experts and our observations of the Arab Detroit business environment, we documented several pathways to success that are supported in the literature review. The success factors include small enterprise, capital, information and family relations, labor, relations with suppliers and customers, and ethnic strategies. Consistent with Waldinger and Aldrich (1990) we observed that Arab Americans had formed many small businesses in and around Detroit. The businesses not only include the familiar gas stations and grocery stores, but also include restaurants, bakeries, and professional services such as accounting and law firms. These small businesses are supported by an AACC and an online Arab American Yellow Pages. From our expert interviews, we found that in addition to working with the commercial banking systems, Arab Americans were often able to secure capital from an internal banking system consisting of family, friends and colleagues. One very interesting fact that came out of the expert interviews was that many of the business owners were from professional, educated and urban backgrounds prior to immigrating to the US. Consequently, they brought many business skills with them. On the other hand, those that did not have business skills did not fare as well. The need for professional skills is well documented in the literature (Fairlie and Robb, 2008; Boissevain et al., 1990). With capital and skills, Arab American businesses settled in "ethnic enclaves" within Detroit and Dearborn that enabled them to cooperate for mutual gain. For example, they were able to manage relations with suppliers and bargain for lower prices. Finally, these entrepreneurs were able to recruit dedicated, capable and low cost workers from among their own families and friends. Table I summarizes our findings.

Supporting organizations for Arab American entrepreneurs

According to Greene and Butler (2004), a nurturing environment and support services are crucial to the survival of small businesses. We found that a significant contributing factor to the success of Arab Americans in the Detroit metropolitan area is largely related to the establishment of several organizations founded by Arab Americans. These organizations are the ACCESS, the Arab American Chaldean Council (ACC), the AACC, and the CACC. ACCESS was started in Dearborn in 1971. Its mission is advocating for and empowering individuals, families and communities. The ACC was established in 1979, primarily to assist these newly immigrated in overcoming the linguistic, cultural and social barriers they faced in their new country. The AACC and the CACC focused on building economic relationships by supporting and strengthening member businesses.

The two organizations also serve as the voices of their members with government agencies and business communities.

Figure 2 shows Greene and Butler's (2004) natural business incubator. Figure 3 expands Figure 2 with the Arab American organizations of Detroit inserted where each organization fills the needs of the community and entrepreneurs based on publicly available information and/or interviews with individuals of each organization. Each component in Figure 3 is discussed below in terms of the support provided by Arab American organizations in the Detroit metropolitan area.

Community business assistance.

English tutoring. As the Arab American population and the number of Arab immigrants in Detroit increased, several Arab American organizations formed to assist individuals and families, both Arab and non-Arab, with the transition to life in the USA. Both ACCESS and ACC initially met this need by offering classes in English as a Second Language (ESL) and Vocational English as a Second Language (VESL), translation services, and assistance in completing applications and tax forms. Since their inception, the ACCESS and ACC have expanded their English services to include assistance with citizenship information, documentation, and education. Provision of jobs. As ACCESS and the ACC expanded and grew, their services went beyond support with the English language to assistance in obtaining employment. As a consequence, both groups expanded their initial language services to provide educational training and GED classes to assist both Arab and non-Arab individuals in obtaining employment. From this orientation, employment assistance expanded to other services such as resume preparation and writing, assistance with job searches, job fairs, job placement services, interviewing techniques, computer skills, basic skills training and vocational training. Additionally, and generally on an informal basis, established Arab business owners often hire newly immigrated family members, friends and individuals, while providing on the job training. This on the job training provides new immigrants with sufficient knowledge and experience to eventually run their own businesses.

[FIGURE 3 OMITTED]

Business training/opportunity searching and instrumental support. As mentioned in the previous section, business training can be obtained from on the job training. More formally, the AACC and the CACC offer extensive programs to assist entrepreneurs with establishing businesses. In particular, both organizations provide entrepreneurs with classes and information on business formation (e.g. financing, marketing, sales, human resources, customer service and leadership). They also act as advocates for businesses with lawmakers and government officials, provide networking opportunities with other business owners, and import/export advice and education. Additionally, the AACC and the CACC offer businesses access to low cost health care, dental care for employees, as well as discounts on services and products from other member businesses. Informally, businesses will often pool resources together in order to obtain discounts from suppliers.

Capital investment fund. Like many entrepreneurs, Arab Americans can raise capital through local and national banks. However, Arab American entrepreneurs often obtain seed capital in the form of low interest/no interest loans from other established Arab American business owners to assist in the establishment of their own business. As an example, an Arab American owner of a convenience store might provide employment to a friend or family member. This employment is often designed e to provide the individual with experience in operating a convenience store at all levels. Once sufficient experience has been gained, the business owner will provide the friend or family member with capital to start their own convenience store.

Community integration committees.

Health. ACCESS and ACC offer Arab Americans, as well as the extended communities, services relating to Behavioral Health, Community Outreach, Public Health, and Social Services. The ACC's Public Health Division partners with the City of Detroit, the Detroit Medical Center Lab, the Karmanos Cancer Institute, and the Women, Infants, and Children (WIC) Nutrition Program to provide preventative and proactive health services, including vaccinations, to the community. In general, the ACC either strives to achieve national accreditation or partner with other organizations to offer the aforementioned services. For example, its Behavior Health Division has been accredited by the Rehabilitation Accreditation Commission since 1992, and offers an extensive list of services relating to Psychological, Counseling and Rehabilitation services.

ACCESS's Social Services Division assists in completing forms for various social and immigration programs, as well as rent/mortgage and food assistance .programs. The Community Health Division offers services related to WIC, OB/GYN visits, pediatric care, and mental health screenings to name a few.

Education. As previously mentioned, ACCESS and the ACC offer programs to assist Arab, as well as non-Arab, individuals with obtaining their GED, computer skills, ESL and VESL classes. In addition, both ACCESS and the ACC offer mentoring, tutoring, homework assistance, computer classes, and scholarship programs for advanced education. ACCESS also offers Language Arts and Math Enrichment sessions as well as Arabic language classes.

Social events. The AACC has an annual Arab American Festival with food, amusements, music, art, merchandise, and crafts designed to promote Arab American culture, awareness of the Arab American Community, and to highlight the support it provides the community. Other social events sponsored by the various organizations include sports activities for adults and youth, and golf outings.

Youth and sports. As previously mentioned, ACCESS and the ACC offer various after school programs for youth for both educational assistance and sports. Both programs additionally offer programs to assist youth with management of stress, anger and conflict, as well as support for mental health issues.

Religious education. Religious education is largely the responsibility of mosques and churches in the Detroit area. Currently, there are about nine Chaldean churches in the Detroit metropolitan area to serve the needs of Arab Christians. Over a dozen mosques are also available in Dearborn and other areas of Detroit to meet the religious and social needs of Arab Muslims. To conclude, Figure 3 shows the way the process of community integration and business assistance interact to help the Arab immigrant entrepreneur become established in the Detroit area.

Additional community support/involvement--The Seven Mile Project. The Seven Mile Project is part of the long-term vision of the ACC to revitalize Detroit. Specifically, the ACC has established three phases for this revitalization. The first phase, completed in 1998, is the Community Initiative Facility that provides many of the human health and employment services discussed above. The second phase, completed in 2003, is its Business Development and Community Revitalization Program which provides recreational and educational services to the community. The third phase is neighborhood renewal. Still in the planning stages, the ACC hopes to create a safe district for businesses and residents by renovating parks, streets and neighborhoods, and in some cases creating urban farms to not only provide a source of organic farming, but also to create activities and employment for the community.

Economic contributions of Arab Americans and Arab entrepreneurs The second research question of this study is:

RQ2. How do Arab American immigrants and their businesses impact the local Detroit economy?

Census data from 2000 provides information about Arab American immigrants and their businesses. For the purpose of this study, Arab Americans include Arabic and Chaldean ancestries.

According to a study done by Center for Urban Studies, Wayne State University (2007), the Arab American population in the four counties of Macomb, Oakland, Washtenaw and Wayne in 2005 was 162,318. This represented a 28 percent increase over the Arab American population estimate for the year 2000. According to the 2010 Census, the city of Dearborn, located directly to the south west of Detroit, has a population of about 97,775. Between 2000 and 2010, Dearborn increased its population by about 0.4 percent while the city of Detroit lost about 25 percent of its population. About one-third of Dearborn's population is Arab American. Dearborn is also the location of the Islamic Center of America, the largest mosque in North America, the Arab National Museum, the AACC, and the ACCESS.

Table II shows the increase in Arab American employment in the four-county region by industry in 2000 and 2005. The data for 2000 were based on the 2000 US Census while the data for 2005 were estimates based on the 2005 American Community Survey. Table II shows that total Arab employment in the four-county region for 2000 and 2005 was 47,924 and 68,518, respectively.

We can observe that in 2005, Arab Americans were employed in many different industries. Retail trade was the largest industry that employed (18,636 or 27.2 percent) of all employed Arab Americans. The next three industries were manufacturing (11,743 or 17.1 percent), accommodation and food services (5,812 or 8.5 percent) and healthcare and social services (5,516 or 8.1 percent). In terms of employment contribution, Arab American economic activity supported between 99,494 and 141,541 jobs in the four county region in 2005 (Center for Urban Studies, Wayne State University, 2007). This represents 4.0-5.7 percent of the total employment in the four-county region. Between $5.4 billion and $7.7 billion in wages and salary earnings were generated directly or indirectly by Arab Americans.

More than 15,000 businesses in the Detroit metropolitan area are owned by Middle Easterners (Ghosh, 2010). Most of them are Arab entrepreneurs and many of these businesses have revived the Warren Avenue neighborhood in Dearborn. Arab-owned businesses have grown from a mere half dozen in the early 1980s to over 117 businesses along the Warren Avenue area by the year 2000 (Abraham and Shryock, 2000).

Some Arab American entrepreneurs are making significant contributions to the Detroit metropolitan area. One example is Sam Simon, an Iraqi American, who began his career working for a Detroit gas station, and as of 2010, he owns Atlas Oil Company with annual sales of about $1 billion and product distribution in more than 20 states (Ghosh, 2010). Nawal Hamadeh and her Hamadeh Education Services manage two charter schools in Dearborn and a third in the City of Detroit. Almost all of the students who graduate from these charter schools go on to college.

Tom Gores, born in Nazareth and of Lebanese decent, is a Flint-area native, a graduate of Michigan State University, and CEO of Platinum Equity. He has invested significantly in the Detroit area. In September of 2010 he purchased the Detroit Pistons and Palace Sports and Entertainment which control both the Palace of Auburn Hills and the DTE Energy Music Theater. In 2009 he purchased the bankrupt boat manufacturer Four Winns, which saved hundreds of jobs (Zillgitt, 2011).

Policy implications

The success of Arab immigrants and Arab entrepreneurs in Detroit is not well known and is often misunderstood. In this research, we found that Arab entrepreneurs have a successful record in setting up new businesses in Dearborn and other areas of the Detroit metropolitan area. Site visits and in-depth interviews with Arab business and community leaders gave us a chance to see that Arab entrepreneurs have revitalized many poor neighborhoods in Dearborn and other Detroit areas.

The findings from this research have several policy implications. First, new immigrant entrepreneurs can succeed in a poor and economically depressed area like Detroit with support from family members, other established immigrant small businesses, and community and religious organizations to provide essential social and training services. Figure 3 in this paper explains the natural business incubator model for Arab entrepreneurs in Detroit. Organizations such as Arab-American and Chaldean Council (ACC) Arab Community Center for Economic and Social Service (ACCESS), AACC, and CACC play very important roles for new Arab immigrants to settle, obtain, employment, and engage in entrepreneurship in Detroit. These organizations provided the training and investment network for obtaining investment funds to start and maintain a new business.

Second, many states have centers to develop small business and technology firms. The following are some examples:

* Ohio Small Business Development Center.

* Indiana Small Business Development Center.

* Illinois Small Business Development Center.

* Michigan Small Business and Technology Development Center.

In the past, these centers, working with the US Small Business Administration, and other state agencies have provided many training and counseling services for new and small businesses. These services have helped start new businesses and created many job opportunities. But, these services focus mainly on the community business assistance service segment of the Natural Business Incubator Model as shown in Figure 3. If a state small business development center wants to have a greater influence (or impact) on immigrant communities, it has to provide community integration services as shown in Figure 3. These community integration assistance services can be provided to new immigrants with the cooperation of the ethnic community organizations and local chamber of commerce.

Third, some unique initiatives taken at the state level to revitalize urban areas were successful and should be continued. For example, the "cool city" initiative (or program) organized and partially funded by the State of Michigan was vital to the success of the Seven Mile Project undertaken by the ACC in Detroit. This project not only revitalized a depressed neighborhood, but also provided much needed training and assistance for Arab immigrants and poor citizens in the Detroit metropolitan area.

Fourth, many poor cities and towns in the USA can learn from the story of Dearborn and Detroit entrepreneurs by providing support to attract immigrants and ethnic businesses which will assist in the revitalization of their neighborhoods and provide much needed jobs for the communities. The success stories of Arab American entrepreneurs in Detroit should be publicized more in news media and academic journals.

Conclusions

In this study, we found that the following were important pathways to the success of Arab entrepreneurship in Detroit: small enterprises with available capital from families and the local immigrant networks; training and education of the immigrants; support networks and support organizations that provided many essential social and training services needed by new Arab immigrants and entrepreneurs. Many Arab American organizations fulfill the needs of the community by providing assistance outlined in the natural business incubator first mentioned in Greene and Butler (2004). We expanded the model by including the names of the local organizations that play active roles in assisting Arab entrepreneurs in Detroit and Dearborn. From our observations and site visits, we discovered that the theory of middleman minority and the enclave economy theory not only provide useful explanations for the success of Chinatown in New York City (Bonacich, 1972; Zhou, 2004), and the Cuban community in Miami (Portes, 1987), but they can also be used to support the immigrant entrepreneurship development in cities like Detroit as well.

Finally, we can conclude that Arab immigration and entrepreneurs have had a positive impact on the Michigan economy and on the Detroit metropolitan area in particular. In the future, Arab immigrants and Arab entrepreneurs will continue to play an important role in the Michigan economy.

Further reading

Waldinger, R., Howard, A. and Ward, R. (Eds) (1990a), Ethnic Entrepreneurs: Immigrant Business in Industrial Societies, Sage, London.

Abbreviations of organizations and websites

ACC--Arab-American and Chaldean Council (available at: www.myacc.org/).

ACCESS--Arab Community Center for Economic and Social Services (available at: www.accesscommunity.org/).

AACC--Arab American Chamber of Commerce (available at: www.arabchamber.org/).

AANM--Arab American National Museum (available at: www.arabamericanmuseum.org/).

ADR--Arab Detroit Radio (available at: www.arabdetroit.com/radio/).

CACC--Chaldean American Chamber of Commerce (available at: www.chaldeanchamber.com/).

DAIF--Dearborn Arab International Festival (available at: www.arabdetroit.com/events.php? id = 1339).

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Ola Marie Smith, Roger Y.W Tang and Paul San Miguel

Department of Accountancy, Western Michigan University, Kalamazoo, Michigan, USA

Dr Ola Marie Smith, MBA, CPA is an Associate Professor of Accountancy at Western Michigan University. She teaches Management Accounting and Information Systems. She researches management accounting, government, and nonprofit issues. Prior to Western Michigan University she worked for Ameritech (now AT&T), Deloitte, and the Internal Revenue Service. She received her PhD in Accounting from Michigan State University.

Dr Roger Y.W. Tang, PhD, CMA, CIA is a Professor of Accountancy and the Upjohn Chair of Business Administration at Western Michigan University. He has published papers and books in the areas of transfer pricing, mergers and acquisitions, and accounting systems in developing countries. Dr Roger Y.W. Tang is the corresponding author and can be contacted at: roger. tang@wmich.edu

Dr Paul San Miguel, PhD, is an Assistant Professor of Accounting at Western Michigan University. He teaches courses in Accounting Information Systems and Managerial Accounting. Prior to receiving his PhD he worked for SBC Communications.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints

DOI 10.1108/19355181211217643
Table I.
Previous research and
pathways to success for
Arab American
entrepreneurs
                                                  Pathways to success
                                                  for Arab American
Literature source          Description            entrepreneurs

Waldinger and              Small enterprise       Many small
Aldrich (1990)             provides economic      enterprises such as
                           progress to ethnic     stores and gas
                           groups                 stations

Fairlie and Robb (2008),   Startup capital,       Startup capital from
Boissevain et al. (1990)   expansion capital      internal banking
                                                  systems and family
                                                  businesses

Fairlie and Robb (2008),   Family background      Arab immigrants came
Boissevain et al. (1990)   and education          from elite,
                                                  professional or
                           Information needed     entrepreneurial, and
                           for the                educated backgrounds
                           establishment and      prior to arriving to
                           survival of the firm   the USA. Once in the
                                                  US they formed
                                                  family and economic
                                                  alliances

Boissevain et al. (1990)   Recruit and manage     Workers were
                           efficient low-wage     typically family
                           workers                members and
                                                  occasionally other
                                                  Arab immigrants

Boissevain et al. (1990)   How to manage          Arab immigrants
                           relations with         formed economic
                           suppliers and          alliances to share
                           customers and how to   information and
                           survive strenuous      purchasing power
                           business competition

Waldinger and              Opportunity            Arabs settled in
Aldrich (1990),            structures, group      ethnic enclaves
Zhou (2004)                characteristics, and   (i.e. areas of
                           ethnic strategies      Detroit and
                                                  Dearborn) that
                                                  enabled them to
                                                  provide services to
                                                  and extract support
                                                  from their community

Table II.
Arab American
employment by industry
in the four county region
of Michigan, 2000-2005

                                                               2005
                                                  2000   employment
Industry                                    employment    estimates

Forestry, fishing, mining, other                    16           23
Utilities                                          139          199
Construction                                     1,544        2,207
Manufacturing                                    8,214       11,743
Wholesale trade                                  1,719        2,458
Retail trade                                    13,035       18,636
Transportation and warehousing                   1,252        1,790
Information                                      1,019        1,457
Finance and insurance                            1,491        2,132
Real estate, rental, leasing                       879        1,257
Professional and technical services              2,743        3,922
Management of companies                             32           46
Administrative and waste services                1,037        1,483
Educational services                             2,865        4,096
Health care and social services                  3,858        5,516
Arts, entertainment, recreation services           529          756
Accommodation and food services                  4,065        5,812
Other services                                   2,769        3,959
Public administration                              718        1,026
Total                                           47,924       68,518

Notes: The four-county region in Michigan includes the counties of
Macomb, Oakland, Washtenaw and Wayne

Source: The 2000 Census and 2005 American Community Survey, and Center
for Urban Study, Wayne State University (2007)
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