Esplendor y ocaso de los Barcelonnettes en Mexico y sus implicaciones para una teoria de diasporas empresariales.

AutorCastaneda, Gonzalo

The Rise and Fall of the Barcelonnettes in Mexico and their Implications for a Theory of Entrepreneurial Diasporas


The contemporary world is highly globalized in terms of trade, capital and migration flows. In particular the movement of people from developing countries to developed ones is astonishing. According to the World Bank (2011), more than 215 million people live outside of their country of birth, which represents approximately 3 per cent of the world population, a little bit more than the inhabitants of Brazil-the fifth largest country--and 40 per cent more than in 1990 (The Economist, 2011). Likewise, one in 10 inhabitants in developed countries is an immigrant. The Chinese and the Indian overseas communities are the two largest in the world, where the former has between 32 and 40 million members, and the latter between 20 and 30 million (Chand and Ghorbani, 2011).

Besides the social and political consequences of people crossing countries' borders on a temporary or permanent basis, the impact of migration flows for the world economy and local development is very high. For this reason, in recent years many scholars of a wide variety of disciplines are becoming interested in a process known in academic circles as transnational networking or entrepreneurial diasporas (Nkongolo-Bakenda and Chrysostome, 2013; Kariv et al., 2009; Salaff et al., 2003). In general, a diaspora is defined as an ethnic group composed by people who emigrated from a particular nation-state and their descendants. (1) These individuals then settled in one or several countries on a somehow permanent basis, while preserving psychic, social and material links with their place of birth. A diaspora is said to be entrepreneurial when many of its members develop and use their business skills to set up firms in the host country, and take advantage of their ethnic background and networks at home in order to undertake transnational economic ventures.

Diaspora entrepreneurs are frequently found and, therefore, this phenomenon is common to most societies (Dana, 2007; Vasta, 2004). In an entrepreneurial diaspora, new ethnic firms are formed with the support of migration-chains that provide financial resources, connections, training, recruitment channels and customers. A variant of entrepreneurial diasporas known as "communitarian spin offs system" helps newcomers establish their own businesses once they have proven to be competent and loyal employees (Maeztu, 2001). The credibility of the promise made to the recruited personnel of sponsoring their entrepreneurial adventures in the future depends upon community social governance, that is, upon the set of mechanisms (social norms, beliefs, ideologies) that condition individual behavior because of their embeddedness in specific social networks and communities (Bowles and Gintis, 2000).

In the literature there is still a lack of understanding of the dynamics of entrepreneurial diasporas and the sustainability of ethnic firms. This type of dynamics is, precisely, analyzed here by reviewing the experience of a diaspora of French immigrants who came to Mexico in the 19th century from Barcelonnette and its surroundings (Chabrand, 1897). Although the history of the Barcelonnettes diaspora is only a specific case, the understanding of its rise and fall can undoubtedly contribute to build a theoretical framework that can be used for explaining other entrepreneurial diasporas, either from old days or contemporary. In the paper, an overlapping generations model for the size of the business network is built, based upon micro-foundations related to the economic and social arenas. With this model it is shown that the success of an entrepreneurial diaspora with a spin offs system can also be the cause of its demise, due to the existence of negative feedbacks between the two arenas.

The rest of this paper is structured as follows. Section I presents a literature review on the dynamics of entrepreneurial diasporas. Section II deals with a brief revision of the Barcelonnettes' bibliography and introduces an analytic narrative to explain the rise and fall of this entrepreneurial diaspora. Formal modeling starts in section III, where wages and firms' profitability under the "communitarian spin offs system" are derived. Section IV develops a model for the formation of social norms. Section V describes logistic growth and the interconnection between social and economic arenas. Section VI presents the solution of the model by graphical means. Section VII deals with numerical simulations that reproduce the dynamics of the Barcelonnettes diaspora. The paper ends with the conclusions.

  1. Literature Review on the Dynamics of Entrepreneurial Diasporas

    Most studies dealing with the dynamic process of ethnic firms analyze intergenerational mobility (Borjas, 1993; Trejo, 2003), performance in ethnic entrepreneurship dynasties--second or higher generations--(Kantor, 2012; Beckers and Blumberg, 2011), or survival dynamics of firms (Georgarakos and Tatsiramos, 2009; Wennberg et al., 2011). However, a broader view is required to comprehend the survival of a cohesive chain-migration network that allows the operation of ethnic firms. In other words, the economic benefits of transnational networks can be maintained through time only if migration flows and ethnic social governance keep providing the mechanisms for the proper functioning of entrepreneurial diasporas.

    According to Bello (2007), and references cited there, different versions of spin offs systems were used by ethnic firms in Mexico at the end of the 19th century. Diaspora members in this country were not attracted by salaries, which were very low in comparison to those offered in Cuba and Argentina, or by the possibility of working as employees. Instead their decision to leave their birth place was motivated by their desire to become entrepreneurs with the patronage of previous immigrants. While the Spanish spin offs system was more prone to support employees with family links, the French spin offs system was much more meritocratic and helped the most loyal and hard-working employees to become independent entrepreneurs. These cases contrast with the Lebanese community that did not establish large business networks with long-term relationships between employees and their patrons.

    For more recent periods, Den Butter et al. (2007) present empirical evidence for Netherlands of ethnic firms embedded in entrepreneurial diasporas with spin offs systems. These authors argue that these networks create resources for the members of the migration-chain. Each network member expects that other members will reciprocate in the future when they receive a favor. In particular, informal ties between employees and patrons solve monitoring and bonding problems that make the employment relationship with co-ethnics more productive. In exchange for low salaries and long working hours, an employee can obtain promotions, become a partner, or take over the firm when the owner retires. Additional contemporary evidence is presented in Tulchinsky (2008) for Jews in Canada, and in Hougaz and Betta (2008) for Italians in Australia.

    As opposed to other economic phenomena, the studies of entrepreneurial diasporas usually combine the analysis of market structure and incentives with sociocultural factors rooted in their ethnic background (Chand and Ghorbani, 2011; Volery, 2007). This multidimensional perspective is explained by the fact that scholars in management, social psychology, sociology, and organizational studies are the main contributors to this line of research. On the one hand, over-confidence, innovativeness, risk-taking, tolerance of uncertainty and other entrepreneurial attitudes are, for many authors, heavily related to the individual's culture. On the other hand, the social embeddedness of these ethnic firms is thought to be crucial for their proper functioning and, hence, cultural factors associated to the immigrants' networks are considered to be very relevant (Licht and Siegel, 2005; Rath, 2000).

    Only in recent years mainstream economists are starting to introduce culture as a possible determinant of economic exchanges (Guiso et al., 2006). Their reluctance to advocate this type of explanations is explained mainly for instrumental reasons since such hypotheses do not fit in their neoclassical framework, with homogenous and rational agents, and because of the difficulties in testing them statistically. However, with the increasing prominence of fields like behavioral and experimental economics, the use of new data bases, and the development of better econometric tools, it is now feasible to identify differences in individuals' preferences and beliefs in terms of cultural background and, then, to show statistically which kind of impact those beliefs and preferences have on economic outcomes. (2)

  2. The Barcelonnettes' Entrepreneurial Diaspora in Mexico

    There are several secondary sources describing the experience of the Barcelonnettes in Mexico. In particular, Gouy (1980) and Gomez-Galvarriato (2001) identify this group of entrepreneurs as an example of ethnic networking. While the former emphasizes sociological arguments to explain their business practices, the latter provides an economic interpretation of their networks by invoking concepts of Douglas North's new-institutionalism, such as agency problems, asymmetric information and transaction costs. However, none of these authors develop an integrated socioeconomic model for understanding the enormous economic success and subsequent downfall of this entrepreneurial diaspora. The two goals of this section are to present a brief historical overview of this ethnic group and an analytic narrative that offers some insights to be formalized in the model developed in the following sections.

  3. 1. Some Historical Facts

    The Barcelonnette diaspora in Mexico started in 1818-1820 with the Arnaud brothers, who founded Las...

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