To examine how institutions in immigrants' home countries and their social ties in the host country condition their adoption of the enclave strategy and how this strategy affects business performance in times of crises.
Drawing on institutional, social-embeddedness and mixed-embeddedness theories, researchers analyse 159 immigrant entrepreneurs, combining two data sources: a field survey of the entrepreneurs and the World Competitiveness Yearbook for home-country institutions.
Two dimensions of the enclave strategy emerge – the ethnic character of the “products offered” and the “target market”. Both are adopted more when home-country institutions better support competitiveness. These institutions also moderate the influence of ties with compatriots and non-compatriot residents on the target-market dimension. Firms that apply both dimensions attain superior performance in times of crisis.
Prior research leaves gaps in the antecedents and consequences of the enclave strategy: it largely ignores home-country conditions, tests antecedents in isolation, reports mixed results on the relationships between the adoption of this strategy and business performance, and focuses on economic “good times”. This study helps close those gaps.
