Stay alert, save businesses. Planning for adversity among immigrant entrepreneurs

Planning for adversity as anticipation of resilience

Organizations inevitably face adversity that threatens functioning and performance at any moment in time (Whiteman and Cooper, 2011). For this reason, it has been widely argued that firms should enhance their organizational resilience, which is the ability to cope successfully with unexpected events, bounce back from crises, and promote future success (Duchek, 2020). Indeed, a highly resilient organization is more adaptive, competitive, agile, and robust than less resilient organizations and rebounds from adversity strengthened and more resourceful (Denyer, 2017).

Much research on organizational resilience has focused on large firms. In this context, resilience has often been conceptualized as being derived from their employees' psychological traits (Luthans, 2002) and behavioral and cognitive capabilities (Williams et al., 2017). It has also been presented as rooted in the firm's processes, including the empowerment of managers (Alesi, 2008), the use of responsible management practices (Ortiz-de-Mandojana and Bansal, 2016) and the development of the right culture to navigate adversity (Koronis and Ponis, 2018). Conversely, resilience in small firms has been much less studied (Battisti and Deakins, 2017). Part of the literature agrees that SMEs generally are more vulnerable than larger companies because they have more difficulties in obtaining resources compared to larger firms (Freeman et al., 1983), suffer shortcomings in terms of technological, managerial, and human capabilities, and depend more strongly on a few customers and suppliers (Branicki et al., 2018; Chowdhury, 2011). However, SMEs also show some features that could enhance organizational resilience (Eggers, 2020). They can be more flexible when opportunities or threats arise because they are less affected by inertia, rigidity, and sunk costs (Tan and See, 2004) and their decision making processes are less bureaucratic (Battisti and Deakins, 2017). Moreover, decision-makers are closer to the ground and may quickly adapt to constantly changing customers' and other stakeholders' needs and can reorganize and withstand adversities (Eggers et al., 2012).

A capability-based conceptualization of organizational resilience has been recently proposed by Duchek (2020), asserting that resilience is dynamic in nature, can be conceptualized as a multi-stage process (Williams et al., 2017), and emerges as a “unique blend of organizational capabilities and routines” (Duchek, 2020). The three stages of this process are anticipation, coping, and adaptation, therefore this model follows studies that see resilience as a proactive, rather than defensive, response to crisis (Lengnick-Hall et al., 2011).

Firms can react to a crisis by preparing a plan as soon as they perceive adversity using crisis management practices (i.e. acting with a containment effect), or they can prepare a plan in advance to deal with unknown potential threats (i.e. acting with an anticipation effect). In the former, crisis management practices involve the capability to correctly frame the threats to the organization and design a plan for addressing them (Spillan and Hough, 2003; Vargo and Seville, 2011). In contrast, planning in advance relates to how firms anticipate (rather than react to) to unpredictable, high-impact situations (Pearson and Clair, 1998), as well as the cumulative daily disturbances that threaten and can eventually cause the proper functioning of the organization to degenerate (Williams et al., 2017).

This paper focuses on planning in advance, i.e. on the anticipation stage of resilience that is the ability to detect a critical development and to adapt proactively, preventing possible disturbances (Boin and Van Eeten, 2013; Ortiz-de-Mandojana and Bansal, 2016). Anticipating threats and preparing accordingly can reduce organisational vulnerability and improve organisational resilience (Burnard et al., 2018; Latifah et al., 2021; Mpekiaris et al., 2020). Anticipation allows the firm to identify unknown internal or external threats (Rauch and Hulsink, 2021), to prepare for them and to mitigate their impact (Duchek, 2020). Anticipation is shown through a variety of actions, both informal, such as effective relationships and mutual understanding, and formal, such as the development of plans that delineate potential threats and the corresponding response actions. The focus of this paper is on the role of planning in advance as a way to plan for adversity (Mpekiaris et al., 2020; Vargo and Seville, 2011). Planning for adversity is a process through which firms develop a plan to mitigate adverse events before they arise. The adversity plan should have the same importance as the strategic plan and should be simple and easy to execute if crisis hits (Hough and Spillan, 2005).

Planning for adversity can help in formulating reasonable understandings of event characteristics (i.e. micro-vs. macro-events, valence, uncertainty, temporal focus, and magnitude) (Rauch and Hulsink, 2021) and in developing the ability to scan the internal and external environments, determining how they are expected to evolve, identifying opportunities as well as potential sources of crises through the recognition of early signals or scenario-based techniques. Accordingly, SMEs should take decisions that enhance the possibility of the firm to thrive and circumvent the risk of future disruptions (Ortiz-de-Mandojana and Bansal, 2016). These abilities will help firms to perceive and respond to changes before their effects become real and the entire community cope with and recover from adversity (Rauch and Hulsink, 2021).

Despite the importance of planning for adversity as a proactive action to enhance organizational resilience through anticipation, few studies have examined organizational resilience as a process before the impact of a crisis event in the context of SMEs (Han and Nigg, 2011; Herbane, 2015; Mpekiaris et al., 2020; Sadiq and Graham, 2016; Spillan and Hough, 2003). Conversely, most studies focus on resilience mainly after the impact of crisis events and in the context of larger companies (Marcazzan et al., 2022).

Immigrant entrepreneurs and business performance

Immigrant entrepreneurs are defined as entrepreneurs that reside and create their business outside their country of origin (Dabić et al., 2020). This definition centers on first-generation immigrants, who tend to retain a strong identification with their origins, while acquiring new skills, values, and attitudes within a different societal context [1].

Immigrant entrepreneurs are a heterogeneous group with diverse motivations and attributes which determine the type of business they establish (Gurău et al., 2020; Rodríguez-Gutiérrez et al., 2020). Existing literature linking immigrant entrepreneurs and performance is sometimes contradictory, possibly because it represents two polarized groups – those who are pushed into entrepreneurship due to difficulty gaining employment and those for whom entrepreneurship is their preferred option (Ndofor and Priem, 2011). Indeed, most immigrants experience downward occupational mobility when they arrive in a host country. Host country employers fail to recognize immigrants' qualifications and experience, and even when they speak the local language, their accent is perceived as the inability to communicate fluently (Creese and Wiebe, 2012). As a result, immigrants tend to settle within specific locations or enclaves (OECD, 2018), which sustain community-based markets, generating opportunities to serve co-ethnics, typically in retail, accommodation, and food services sectors that provide little potential for business expansion (Evansluong et al., 2019; Kerr and Kerr, 2020). These markets are easily accessible for immigrants low in human capital, as they do not require significant educational qualifications or capital investments (Kloosterman, 2010). The contextualization of immigrant entrepreneurship in comparatively homogeneous ethnic enclaves contrasts with the diversity that immigrants contribute to economic activity (Yamamura and Lassalle, 2021).

As entrepreneurship may be seen as an alternative to earning a living rather than a way to pursue high returns, many immigrant entrepreneurs are reluctant to take the business risks required to grow, especially if they judge their entrepreneurial ability to be lower than that of native entrepreneurs (Van Stel et al., 2021). Their fear of business failure may be exacerbated by being outside the welfare systems in their home and host countries and their inability to marshal the financial and other resources needed to grow the venture (Bruder et al., 2011; Gurău et al., 2020). This is perhaps why empirical evidence shows that immigrant-led businesses lag behind native-led businesses in terms of sales, profits, survivability, and employment in knowledge intensity industries (Mueller, 2014) or non-high tech sectors (Kerr and Kerr, 2020).

On the other hand, there is growing evidence that some immigrant entrepreneurs are potentially advantaged compared to their native peers and perform exceptionally well (Mckeever et al., 2015). The lived experience of migration, for example, has been found to shape individuals' perceptions of their abilities, increasing their confidence and entrepreneurial intentions (Mawson and Kasem, 2019). Highly skilled immigrant entrepreneurs represent a significant share of entrants in high-tech industries, in locations like New Jersey or California (Kerr and Kerr, 2020). In high-tech industries, immigrant-led firms resemble native-led firms in terms of international activities and start-up and expansion financing, even outperforming them on innovation, perhaps because of their transnational networks (Brown et al., 2019).

Given the diversity of immigrant entrepreneurs, the paper focuses on immigrant entrepreneurs from low-income neighborhoods, who usually respond to push factors when setting up their venture because they are located in neighborhoods with low social indexes (OECD, 2018). These areas are also disproportionately affected by adversity, and so the resilience of these firms becomes essential to the inclusion of the most vulnerable communities.

As the paper develops specific hypotheses, it highlights why immigrant-led firms might develop less organizational resilience, i.e. plan less for adversity, and the role that such planning has on performance. It then describes why immigrant entrepreneurs' choice to plan for adversity relates to the performance gap between native and ethnic entrepreneurs.

Planning for adversity among immigrant-led SMEs

The decision of firms to plan for adversity depends on the characteristics of the firm and its entrepreneur (Arend et al., 2017). Previous studies demonstrate that firms that have experienced a crisis plan for, and react faster and better to, shocks having learned from experience (Carmeli and Schaubroeck, 2008; Doern et al., 2016). Firm size also affects the decision to plan for adversity: larger organizations plan for adversity more often than smaller ones (Herbane, 2010). It is also known that SMEs prefer to contain downsides when they face risks instead of trying to anticipate them (Falkner and Hiebl, 2015).

As regards entrepreneur characteristics, gender and education impact the ways in which entrepreneurs plan for adversity: male entrepreneurs and those with low educational attainment plan less (Josephson et al., 2017). It is also conceivable that proximity to others who plan prompts planning in entrepreneurs, while lower communication skills might hamper it. The paper extends this discussion, arguing that the propensity to plan for adversity may also vary depending on the entrepreneur's origin. Immigrant entrepreneurs share several characteristics with those that are less likely to plan for adversity. Also, their configuration of linkages in the host country is related to a lower capacity to anticipate environmental changes and willingness to plan. Immigrant entrepreneurs are seen as dependent on their relational embeddedness (Granovetter, 1985) within their family and ethnic enclave for support (Van Delft et al., 2000). Past studies show that personal networks provide critical resources for starting a business, including financial resources and intangibles such as self-confidence and support (Van Delft et al., 2000). Such networks provide advantages to immigrants, by facilitating access to scarce resources (Aldrich and Kim, 2007). These resources are critical in reducing immigrants' likelihood of exiting entrepreneurship (Bird and Wennberg, 2016). Yet, despite these advantages, these closely-knit networks may limit the exposure of immigrant entrepreneurs to the host country's formal institutions, hindering their understandings of local systems and markets (Harima, 2022), and overall making them more likely to perpetuate the models their close circle has relied on for years (Bruton et al., 2003). This may be counter-indicative to the planning approach, where consideration of new and changing circumstances is key. An early warning system is unlikely to develop. Consequently, immigrant-led SMEs might lag behind native-led businesses in their likelihood to engage in adversity planning. Thus hypothesis 1 follows:

Planning for adversity and enclave sectors

Migrant entrepreneurs could potentially derive human and social capital benefits from networks that connect them with native entrepreneurs (Meister and Mauer, 2019). However, as noted above, many immigrant entrepreneurs settle in enclaves and focus their business activities on providing specific products and services often in under-developed market sectors related to their community and in which they may have a competitive advantage over non-migrant entrepreneurs (Ndofor and Priem, 2011; Williams and Krasniqi, 2018). These market sectors are often labour intensive and service-oriented areas such as hospitality, transportation, trade and services (Kerr and Kerr, 2020). Thus, they exploit their superior understanding of and privileged access to their co-ethnics (Hamid et al., 2019), but they tend to serve their community instead of reaching a more mainstream market. Consequently, immigrant entrepreneurs settled in enclaves may depend on their proximal community network, and be more likely to operate in specific enclave sectors and less likely to develop external connections (Wilson and Portes, 1980). In this scenario, planning practices are less likely to emerge, as these entrepreneurs might feel less exposed to economic shock because demand for their specialist goods and services is comparatively stable. Moreover, they might find access to (emergency) financial capital from their networks as well as access to supportive sources of supply and consumer outlets, even in adversity. Consequently, immigrant-led SMEs might perceive less need than native-led SMEs to plan for adversity they feel they are less likely to experience. These arguments suggest:

Planning for adversity and performance

From the crisis management perspective, the relationship between firm performance and adversity planning has been principally explored through the lens of organizational resilience. Scholars have sought to explain how adversity planning helps to preserve performance in times of adversity (Williams et al., 2017). Crisis management enables firms to prepare the resources and organizational structures needed to respond to and recover from adversity (Vargo and Seville, 2011). Planning proactively for adverse events allows firms to minimize the negative consequences of predictable crises associated with organizational operations, and anticipate those contingencies that may adversely affect organizational performance (Pollard and Hotho, 2006). In view of the above, hypothesis 3 follows:

Performance and the occurrence of a crisis

Organizations inevitably face adversity that threatens functioning and performance (Doern et al., 2016). In this context, it has been widely argued that firms should develop formal strategies to identify threats, and develop contingency plans and sufficiently flexible procedures for an effective response (Vargo and Seville, 2011). It is important to highlight here that often, although the plan itself is not comprehensive when facing a real threat, the exercise of having developed it is already very valuable.

Nevertheless, experiencing a crisis highlights the need for planning even for those likely to procrastinate, and serves to benchmark existing procedures against a real threat. As such, a crisis often is a wakeup call that serves to update existing procedures and establish new ones. Thus, although more planning may not be a consequence of a crisis, the chance of this planning being taken more seriously increases. In addition, the psychological components of a crisis (e.g. stress, feeling powerless) most likely encourage the consideration of measures to avoid a recurrence. For these reasons, hypothesis 4 is proposed:

Adversity planning, immigrant entrepreneurs, and performance

As mentioned earlier, immigrants' weaker integration in society makes their businesses more vulnerable during recessions, suggesting that crisis planning might have a stronger impact on immigrant-led SMEs' performance compared to native-led SMEs. While developing a plan for adversity, entrepreneurs need to acquire information and to network with others from inside and outside their communities (Minniti, 2005). Planning for adversity should allow immigrant entrepreneurs to embed themselves in broader social circles, and to connect with institutions they would not normally interact with, if only to establish who to contact in case of adversity. All these activities build networks and capabilities for a better and faster response at a time of crisis (Lengnick-Hall et al., 2011). Looking beyond existing relationships, learning from new contacts, and possibly broadening the business network are positive side-effects of developing a plan for adversity that strengthen immigrant entrepreneurs' structural embeddedness by strengthening their links to the host country's institutional frameworks (Burt, 1997). This, in turn, is known to impact the creation of entrepreneurial opportunities (Lassalle et al., 2020) and improve firm performance (Hough and Spillan, 2005).

Given that immigrant-led SMEs are typically less structurally embedded than their native counterparts, the positive effect of planning on performance might be relatively stronger for them. Immigrants' lower familiarity with the institutional and market conditions in the host country may impact on their ability to perceive early warning signals of a threat. Thus, planning may allow immigrants to develop anticipation capabilities and to prepare for crises before they arise (Duchek, 2020). It is also conceivable that a new contact shares warning signs not perceived by the immigrant entrepreneur. Moreover, increased structural embeddedness is useful in the event of unexpected circumstances. All contacts may provide access to information, but new contacts offer new and non-redundant information (Lassalle et al., 2020). Such information may prompt the entrepreneur to adopt new paths in the running of the business and may foster serendipity (Busch and Barkema, 2022), both when dealing with adversity and in their daily running of the business. All these arguments lead to the following hypothesis:

Figure 1 provides an overview of the hypothesized relationships:

Data

This study uses data from a novel, hand-collected international survey on business resilience among 3,316 SMEs in five European cities – Paris, Frankfurt, Milan, Madrid, and London. The rationale for sampling from these five cities includes: 1) the desire to represent different known migrant populations, 2) the accessibility of representative numbers of migrant entrepreneurs, 3) the convenience of continued supervision of data collection, and 4) the first-hand knowledge of the business environment allowing for appropriate contextualization of events during our observation period. Given the focus on immigrant-led SMEs, rather than analyzing country-level data, the survey explores multiple European metropolitan cities where immigrants in vulnerable environments are likely to congregate. In each city, around 600 small firms with between 3 and 99 employees were surveyed using a computer-assisted telephone interview (CATI). This is proven to be the best means of reaching the appropriate personnel within a business, typically with much better response rates than an online survey. A minimum business size was set to allow disentangling individual founder's attributes from organizational characteristics. The respondents were all owners and leaders of their businesses. Quotas were applied to ensure that respondents included immigrants and a balanced mix of men and women. The survey was carried out across low- and middle-income boroughs in all five cities, for both immigrant and native samples. The samples were stratified in order to be representative of the spread of businesses by size in each city. The survey aimed to achieve a sample of 300 firms in low-income and 300 firms in middle-income boroughs in each city, with around half being female-led and a quarter being immigrant-led. The questionnaire used was developed collaboratively by researchers in all five countries to ensure applicability in all countries, before being piloted in London in September 2018, finalised and translated. This meant that a standard questionnaire structure and coding were used in each city. Fieldwork took place in London in October to December 2018 and in Paris, Frankfurt, Milan and Madrid between January and May 2019. Once fieldwork had been completed, the resulting five data sets were combined using the STATA statistical software package, during June and July 2019. The final combined dataset includes information on 900 immigrant-led businesses, where immigrants represent the majority of owners in the firm, and 2,416 native-led businesses. The survey probed a range of issues, including respondents' approach toward risk management, their experiences of adversity, and their attitudes toward strategies and interventions to mitigate crises.

Dependent variables

The conceptual framework identifies two dependent variables: planning for adversity and firm performance. Planning for adversity has been identified in the literature as the formalization of a planning process and as the perceived importance of planning (Pearce et al., 1987). This study uses the former definition and identifies resilience planning approach by asking how entrepreneurs feel about business risks. There are four options: (i) entrepreneurs do not think about risks and deal with them when they arise (score of 1); (ii) entrepreneurs sometimes think about risks but do not make specific plans to address them (score of 2); (iii) entrepreneurs regularly think about risks and formulate plans (score of 3); (iv) entrepreneurs have a formal risk register with response strategies, which is regularly reviewed (score of 4).

The second dependent variable - firm performance - is operationalized as an increase in turnover and measured with a binary variable asking whether turnover, compared with the previous financial year under which the firm operated, increased (value of 1) or decreased (value of 0). The chance that turnover remained exactly the same as before was neglible. Table A1 in the online appendix provides descriptive statistics on planning for adversity and performance according to business leader's origin.

Independent variables

The independent variable of interest is a dummy variable identifying immigrant-led businesses. The authors identified these businesses based on a screening question about the country in which the owner-managers were born. When the respondent is the only manager, the authors define it as immigrant-led if she/he was born outside the country but moved there in the last five years or were born in a developing country (according to OECD definition) [2]. When a board controls the company, it is defined as immigrant-led if at least 50% of the board members are immigrants, i.e. if they were born outside the country and lived in the host country for at most five years or were born in a developing country.

Moderators

The authors created a dummy variable with a value of one if the business is in an enclave sector (trade, transport, hospitality, or other services) and zero otherwise (agriculture, manufacturing, construction, information and communication, finance, insurance and real estate, and business services) based on evidence on the higher concentration of immigrant-led businesses in low value-added sectors (Basu and Pruthi, 2021), which the data also supports (Online Appendix Table A2). The measure of the enclave sector accounts for a classification of industries and might not reflect firms' spatial location or the intensity of entrepreneurs' community ties. Yet, the authors expect entrepreneurs in highly concentrated sectors to draw heavily on their ethnic community for business advice and support.

The adversity of being an immigrant and the challenges might alter the entrepreneur's view of the intensity of the crisis, especially if migration is borne out of a crisis event such as a conflict or natural disaster. Therefore, the analysis also considers the relationship between planning for adversity and performance of native- and immigrant-led businesses on the subsample of businesses who have experienced a crisis (Online Appendix A7). Firms' experience of crises is operationalized as a dummy variable valued at one if the firm has survived an existential crisis in the past five years, and zero otherwise [3]. The definition of the crisis was left open to the respondents' interpretation, allowing the capture of crises with a range of causes, i.e. internal, external, technical/economic, or people/social/organizational issues (Doern et al., 2016). Although the crisis may be ongoing, the authors do not believe this compromises the analysis since the question clearly asked about crises that threatened the survival of the firm. Responding to the questionnaire demonstrates that the firm has survived.

Control variables

A set of individual- and firm-level control variables was also included. Individually, this study controls for entrepreneurs' age, gender, level of education [4], and personal or individual resilience. To measure entrepreneurs' individual resilience, it uses the 10-item Connor-Davidson scale (Connor and Davidson, 2003). At the firm level, this study controls for business size, sector, and firm age [5]. It also considers the type of risks businesses expect to face in the future by incorporating two dummy variables that capture internal [6] and external risks to the firm [7].

Robustness analysis

In this section robustness specifications to overcome two potential biases of the data due to its retrospective nature are proposed. First, the perceptions of respondents might be altered, leading to an overestimation or underestimation of the real business performance. Second, a reverse causality problem could lead to biased estimations due to endogeneity. Specifically, a decrease in performance in t−1 could influence the choice to plan for adversity in t. Two additional estimations were run to overcome these limitations.

The first uses a new dependent variable which captures ambition about next year's performance, instead of last year's performance. The correlation between planning for adversity and anticipated performance was measured. The conclusions are qualitatively unchanged with this estimation (see Table A12 in the online appendix): planning for adversity and anticipated performance are correlated, especially in the immigrant entrepreneurs sample.

The second estimation accounts for the reverse causality bias by running the Lewbel and Dong estimator based on a natural experiment that took place prior to fieldwork in Paris. The instrument is a natural experiment of the so-called ‘Yellow Vest’ protests, which hit businesses for several months in the Paris metropolitan area. A dummy variable with a value of one if the firm reported that the crisis was a significant or very significant threat (score of 4 and 5) and zero if the threat was not significant (score of 1–3 on a 5-item Likert scale) was created. As the crisis started in December 2018, the instrument could only influence a firm's choice to develop an adversity plan by the time of the interview in March 2019 but not firm performance in t-1. The conclusions are unchanged when accounting for the endogeneity of the variable on planning (see results in Table A13 in the online appendix). There is a positive and statistically significant correlation between planning for adversity and performance in the sample of immigrant entrepreneurs.

Theoretical contributions

This study offers several contributions to the literature on immigrant entrepreneurship and organizational resilience.

The research builds on entrepreneurship studies that have focused on the performance implications of immigrant-led companies but overlooked the relationship with planning for adversity (Bird and Wennberg, 2016; Kerr and Kerr, 2020). Firstly, the results confirm that immigrant-led SMEs plan less for adversity than their native counterparts, but this effect is not uniform among immigrants. Specifically, those immigrant-led firms that operate in enclave sectors plan less. This indicates that planning for adversity and the capability to go beyond the restricted circle of ethnic networks are positively correlated. Second, the results demonstrate that planning for adversity positively affects performance, and this relationship is more important for immigrant entrepreneurs, who can be more vulnerable to economic downturns. The results also show that immigrant-led SMEs that plan for adversity are less likely to report lower performance compared to native-led SMEs. Third, the results demonstrate that those immigrant-led SMEs that benefit the most from planning for adversity are those that have not been hit by a crisis. Overall, these results extend the existing literature on immigrant entrepreneurship and performance (Ndofor and Priem, 2011), proving that planning for adversity allows immigrant entrepreneurs to pick up early warning signals of a threat, before the firm is irreparably damaged (Carmeli and Schaubroeck, 2008). Regularly analyzing threats and preparing for them, implies collecting information, recognizing the internal and external resources they can access, and developing new resources and relationships outside the enclave that they usually depend on.

These arguments and empirical findings also extend understanding about the value of immigrant entrepreneurs' social embeddedness. Extant literature using this theoretical perspective has focused on the value of relational embeddedness to the success of their ventures; several studies have shown that immigrants' comparatively tightly-knit and closed social networks provide benefits in the form of enhanced cooperation and easier access to resources (Aldrich and Kim, 2007; Bird and Wennberg, 2016; Lassalle et al., 2020). The paper extends this view by arguing that immigrant entrepreneurs may also benefit from building structural embeddedness, which may provide them with vital information related to the host country to help them in times of crisis. Prior studies have noted the importance of assessing both relational and structural components of social embeddedness, so as to understand their unique contribution to managerial performance (Lassalle et al., 2020). Here the authors offer such an approach, balancing the relative importance of relational components and structural embeddedness and the link to planning-related tasks for immigrant entrepreneurs.

The study contributes to the organizational resilience literature with its focus on the resilience practices of immigrant-led firms. The finding that immigrant-led firms are less likely than native firms to plan for adversity empirically demonstrates a key difference in their approach to running their businesses which, given the link between adversity planning and survival (e.g. Battisti and Deakins, 2017; Williams et al., 2017) has relevance for their ability to rebound from a shock. The finding that operating in an enclave sector negatively moderates the relationship between immigrant-led SMEs and planning for adversity, i.e. that immigrant entrepreneurs are less likely to plan when their business operates in an enclave sector, chimes with the stereotypical view of the migrant entrepreneur as embedded in their ethnic network. Some prior research has found such embeddedness to be beneficial as it gives them access to fellow migrant customers as well as to financial and other resources (e.g. Lofstrom, 2017). Other studies have found it to be a disadvantage because such enclaves can be highly competitive, restricting opportunities and profitability (Fairlie and Lofstrom, 2015) and because they can struggle to move beyond the enclave, which can limit growth (Ensign and Robinson, 2011). The authors extend this debate with the new empirical observation that immigrant-led firms plan less for adversity when operating in an ethnic enclave. This may be because they adopt a less formal way of doing business in such circumstances. However, given that planning can be considered an antecedent of organizational resilience, it indicates that operating in an enclave sector makes an immigrant-led firm less likely to plan for and consequently survive adversity.

The study contributes to the process-based view of resilience (Duchek, 2020) by concentrating on the first stage of anticipation. While existing studies on the process-based view of resilience focus on “highly volatile and uncertain times” (Duchek, 2020) that usually create adversity, this study extends such view to business-as-usual times that are characterized by lower volatility and uncertainty. The paper demonstrates that regularly planning for adversity can be useful for a firm's performance, regardless of whether the adversities arise or not (Hough and Spillan, 2005), even if the effect is contingent on the nationality of the leader. Specifically, while native-led SMEs benefit the most from regular adversity planning if they have overcome a crisis in the past, immigrant-led counterparts benefit from planning even outside any adversity period. This suggests that planning for adversity implies focusing on how to address threats before they arise and before they have undermined the organization, and in so doing, builds resilience potential. Thus, making decisions about planning under usual circumstances allows in-depth consideration of, and planning for, future opportunities as well as threats. Conversely, not planning for adversities risks the firm being overwhelmed by a crisis and forced to re-allocate resources to survive, leaving little time for identifying new opportunities. Moreover, the risk of a poor decision-making process due to narrow design and little screening of alternatives is higher and thus likely to negatively affect the firm's growth potential.

Managerial implications

These findings show that anticipating and preparing for negative events is beneficial for a firm's growth regardless of adversity because it encourages the collection of information that is essential to cope with the uncertainty of their current business setting. Therefore, in addition to strategic planning, SMEs should dedicate resources to the periodic analysis of the external and internal environment to detect future threats. Moreover, the positive association with a firm's growth indicates that planning for adversity increases the chances of identifying and preparing for opportunities that may arise alone or alongside threats.

Second, immigrant-led SMEs should plan for adversity in order to survive and grow. Thus, the findings support interventions that encourage immigrant entrepreneurs to be proactive in preparing for possible adversity as the survival and growth of their businesses could ultimately facilitate their better integration into the host society. While strategic planning might be perceived as unnecessary by immigrant entrepreneurs, who often do not aim to grow their businesses, planning for adversity may have better acceptance within this community, particularly following the COVID-19 crisis that demonstrated the uncertainty about the even nearer future. As in strategic planning, this would promote a forward-thinking mindset that helps overcome weaknesses that typically characterize immigrant-led businesses. In the context of current policy discussions in many European countries on integrating inflows of immigrants into the labor market and society (European Commission, 2016), policies promoting planning may constitute a useful tool. Indeed, they could be implemented together with other type of intervention, like incubation or acceleration platforms, that have also proved to be effective in developing social ties outside their network of co-ethnics (Meister and Mauer, 2019). Together, such measures may also foster immigrants' economic and social contribution to their host countries.

Limitations and future research

This study has limitations, some of which suggest future research directions. First, some variables (e.g. firm performance) are not measured as precisely as the authors would have liked, limiting the precision with which the detected effects can be discussed. Second, the study is limited by the cross-sectional nature of the data. Although unable to track planning decisions, business-threatening experiences, and firm resilience over time, the authors made use of the unexpected French “yellow vest” strikes to address endogeneity concerns and thus could partially address this limitation. But longitudinal data could strengthen the analyses, further approximating discussions of causal relationships in the data. Furthermore, sampling is only possible among functioning firms and respondents who are alive and well, possibly exposing the data collection to often unmentioned survival bias, because firms that cease to exist, possibly because of a lack of resilience or any other cause, can by definition not form part of the sample. Moreover, the impact of national culture in the choice to plan for adversity was not considered. This may have been relevant given the diverse origins of the immigrant entrepreneurs and of the five host cities studied. Additionally, the study represents central and southern European cities, but northern countries with strong immigration rates, such as Denmark and Norway, were not included. Their specific institutional settings and strong welfare states may have influenced results, particularly in relation to the perceived need to anticipate adversity. Furthermore, the findings may not be generalizable to other contexts, where immigrants are less concentrated in vulnerable communities. Their already greater integration into society could mean that the construction of networks through planning actions would benefit them less. This suggests future research exploring the contrasts of these findings with firms created by immigrants from developed economies in developing contexts. Similarly, comparison and contrast with potentially further disadvantaged immigrant populations, such as refugee entrepreneurs (Harima, 2022) would further enrich understanding of the implications for business of the motives leading to the migration decision. Indeed, in the specific case of refugees, they tend to move to the nearest safe country and not necessarily to the one where they expect easier integration or where they can make use of their ethnic capital. Finally, the data collection occurred, except in Paris, during a stable period, and before the COVID-19 pandemic, which allowed analysis of recent firm performance without the noise of a more turbulent period. Yet, the latter context could be equally relevant to future research.