I read Tamara Nopper’s provocative article with interest as I do critical studies and work on race and racism. It is commendable that she revisits the debate on sources of Korean immigrant entrepreneurship, but she misunderstands the scholarship. Although she is not attempting to explain what causes Korean small business ownership (2010: 68), my comments will focus on the debate over the sources of Korean American entrepreneur- ship, as pertaining to my research. She does provide insight into how representatives of financial and governmental insti-

tutions involved in the processes of lending and business promotion among all racial and ethnic groups employ color-blind explanations for Asian American economic patterns. Family and kin networks were often cited by her respondents as a reason for relative Korean business success (2010: 77). She pointed out that collective orientation was con- sidered an inherent part of the Asian ‘character’ rather than as a reaction to disadvantage (2010: 78). Nopper’s study resonates with recent findings which have reported that the US Small

Business Administration advocates individualistic color-blind free market outcomes and is a racist institution. While earlier explanations succeed in showing how Asian American communities have unique institutions (e.g. rotating credit associations) that are imbed- ded in their culture and how they could contribute to achieving current economic devel- opment, they are oblivious to the fact that these communities are also located in the USA andthusequallydependon institutions that are commonin theUSA(Ahnetal.2009:230). I applaud her for reminding us of external factors, and in particular, the role of financial institutions. It is time to acknowledge that Korean/Asian Americans are receiving low interest loans

and assistance from the government at a higher rate than other racial minorities. In 2004, African American owned firms received just 3 percent of all SBA loan dollars, and Latino- owned firms just 7 percent, while Asian American-owned firms received 20 percent. Out

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of all racial minority groups, Asian Americans have, for the past decade, received the largest amount of loans from the SBA (US Census Bureau 2003, cited in Nopper 2010: 79). It is telling that Korean immigrants are not segregated economically from the rest of the society. Despite the above merit, I hold reservations about Nopper’s article for following rea-

sons. First I disagree that the disadvantage thesis was generally coupled with dimensions of color-blind racism, as it seems to me that she is only taking into account one variation of the disadvantage theory that centers on human capital. Second, Nopper’s treatment of scholarship on the sources of Korean immigrant entrepreneurship was not fair to the involved scholars as she reduces all of our different approaches into a singular cultural argument. Third, she does not address the source of financial capital that has financed rapid business formation, including important aspects of how immigrants came up with start-up capital and the reliance of immigrants on bank loans. Fourth, although I agree with her post-essentialist treatment of culture, it is still pos-

sible to recognize the role played by culture in entrepreneurship or economic activities.

Disadvantage Theory

I disagree with Nopper that scholars attribute Korean immigrant entrepreneurship to group traits. As I wrote (Park 1997), scholars have developed a number of explanations regarding the propensity of Asians/Koreans to pursue self-employment. Ivan Light and Edna Bonacich (1988) ruled out the popular notion that elements in

Korean traditional culture provide an impetus toward entrepreneurship. They, in a syn- thesis of previous studies, attribute Korean success in small business to ‘class resources’ and ‘ethnic resources’ (Light and Bonacich 1988: 18–19). Bonacich also applies the world capitalist system thesis to Korean immigrant entrepreneurship: Korean immi- grants’ movements to the USA and their entry into small business are closely tied to the US political and economic system. Theorists have proposed two competing explanations for the causes of the disadvan-

tages immigrants experience in the American labor market. From the perspective of human capital theory, the only difference between different workers’ wages and condi- tions arise from individual differences in their human capital (skills, experience, or formal education) or tastes. Korean immigrants’ language/culture barriers, as well as problems with non-transferable skills and education contribute to their disadvantaged status in the American labor market. I employed the other radical approach, termed ‘segmented’ labor market theory, sug-

gesting a managerial strategy of divide-and-rule (Park 1997). There exist important dif- ferences on the demand side, which implies differences in compensation and the like that are not explained by individual workers’ characteristics. In the USA, where the seg- mented labor market is well documented, certain groups of workers tend to get jobs in one market rather than another: racial minorities and women are stereotyped as inade- quately reliable and stable employees, and are more likely to be relegated to second rung

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jobs. This critical structural explanation of the ‘advantage theory’ cannot be labeled a ‘color-blind’ racist explanation as it is defined as a segmented labor market that locates racial, ethnic, or gender discrimination against Korean immigrants. Disadvantage theory explains why Korean immigrants avoid low-wage employment,

but not how Korean immigrants come to organize their small business activities to a greater extent than other groups. In this sense, Nopper is right to point out that disad- vantage theory itself cannot explain the success of Korean immigrant entrepreneurship. I suggest that we need to differentiate the following two questions:

1) what structural factors make Korean immigrants turn to small business ownership as an alternative to low-wage employment?

2) what variables facilitate the establishment of Korean small businesses and affect the success of such businesses?

These facilitating factors include capital formulation, securing labor and business information, as well as contextual factors (the US post-industrial, hourglass economy, retail business trend, the import-export trade, ethnic markets, etc.).

Method of Capital Provision

Nopper’s criticism is limited in that the literature on sources of Korean immigrant entre- preneurship developed in the 1980s and 1990s still holds true. I would like to point out historical specificity of culture. For example, few Korean immigrants in NewYork City (in the late 1980s) received bank loans, as they lacked the credit histories required for obtain- ing loan funds. As an anthropologist, our ethnographies speak to the ethnographic pres- ent; however, we make no promises that what we write about will forever stay the same. There is nothing mysterious about the way Korean immigrants finance their busi-

nesses. However, it should be noted that the method of capital formulation has changed. Until the mid-1970s, it was common for Korean immigrants to get a start in business and receive free room and board from their kin.Thus, a husband and wife could save and establish their own store within two or three years. With the increase in Korean immi- gration in the mid-1970s, it became more common for new immigrants to receive loans from kin or friends and to combine this with personal savings to acquire a business. Since the beginning of the 1980s, with more cash in circulation in the Korean community and more people arriving from Korea, it became easier to organize a rotating credit associa- tion (RCA), or kye. Before 1978, when the limit on the amount of money immigrants could bring out of Korea was lifted, few persons could think of joining rotating credit clubs, and almost none of opening a business immediately upon arrival. In my research in Queens, New York City, in the late 1980s, Koreans acquired busi-

ness capital through savings, kye, loans from kin or a friend, capital brought from Korea, and bank loans. Some 45 percent relied on savings alone, 35 percent had loans or gifts, 16 percent brought capital from Korea, and only 2 percent used bank loans. It should be

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noted that Korean immigrants tend not to reveal that they joined RCAs, or view RCAs as a form of forced savings, rather than as debt.They do not seem to use funds generated via RCAs for start-ups, either. In several cases, they combined different capital sources. Moreover, the source of savings is often from capital brought earlier from Korea, one or more kye, or loans. According to Timothy Bates’s study (1997) of over 2000 Koreans/Chinese who

opened new firms during 1979–1987, the majority of start-up capital that financed small business formation came from family wealth (equity) and financial institution loans (debt), including RCAs, utilizing data from the US Bureau of the Census. These financing patterns were true of all groups. High levels of start-up capital typify Korean/Chinese immigrant-owned firms, highlighting the substantial class resources (human and financial capital) that Koreans/Chinese immigrants have invested in their small business ventures. Family (and former owner) borrowing is actually more frequent than bank borrowing. Asian owners are roughly three times more likely to finance business entry with loans from friends than are non-minority owners (Bates 1997: 114). Definitely, since the 1990s, the use of transpacific capital and bank loans became more

popular. Nonetheless, the Korean American National Survey, conducted by the Center for Asian-Pacific Leadership, University of Southern California in 2010, reported that 56 percent of Korean immigrant entrepreneurs relied on personal funds and 19 percent on bank loans as their start-up capital. Little has changed in this structural pattern. The existing literature has not paid much attention to the relations between the

Korean American economy and their financial institutions such as ethnic banks. Hyeon- Hyo Ahn et al. (2009) explored the roles that formal financial institutions (Korean American banks) played in the economic growth of the Korean American community. As of 2009, there were 19 Korean banks altogether in the USA and 11 of them were located in California. Since the 1980s we saw a boom in establishing Korean American banks. Non-ethnic banks have historically not provided enough credits for minority busi-

nesses; this then led to the formation of ethnic banks. Accordingly, Korean American banks specialize in certain customer types, mainly catering to the business loan needs of small business owners. Another indication of the close relationship between Korean American banks and Korean American businesses is the Small Business Administration (SBA) Loan Program. For example, Hanmi Bank began to grant SBA loans in 1988, and these have since been popular among Korean small business own- ers. One third of all SBA loans in Los Angeles were provided by Korean ethnic banks for Korean small business owners (Ahn et al. 2009: 242). Ahn and his colleagues reported the rapid increase of commercial real estate loans by Korean American banks since 1995. I contend that the popularity of SBA loans cannot be understood without considering the mediating role played by Korean American banks. I will also add that the SBA loans were sought as part of the post-1992 Los Angeles Civil Unrest disaster loan.

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Assessing ‘Culture’

Culture cannot be reduced to or reified as behavioral characteristics. There is no way to say that only group A has a culture (e.g. ethnic, class, family, or other resource), and not group B. Just like Korean immigrants, as Carol Stack’s All Our Kin (1974) indicated, poor, urban, black families have strong, resilient and informal support networks that cope relatively well in an often hostile environment. These networks were diffused over several kin-based households that changed frequently. The usual method of arbitrarily accepted definition of the family as nuclear or matrilocal may block one from seeing the world as it exists in very poor communities. I used the notion of culture in referring to a different strategy in organizing various

forms of social relations (gender, family/kin, race/ethnicity, etc.). Thus my book exam- ines why Koreans gravitate toward small businesses and how the structural imperatives of this process lead to transformations of Korean gender, kinship, family, and religion, and, more broadly, cultural beliefs and ideologies. However, this strategy is not going to work for African Americans in South Central, who are mostly working class with pensions.

Color-Blind Racism

Nopper relies on what Bonilla-Silva terms the ‘new racism’, which is characterized by, but not limited to, covert racial discourse and practice, the avoidance of racial terms, and the invisibility of how institutions reproduce racial inequality (quoted in Nopper 2010: 67). Perhaps color-blind racism has been defined too generally so that it has lost its useful- ness? While space does not allow me to discuss ‘color-blind’ racism, it would be useful if we could contextualize these US federal government and Korean bank officials and their discourses. More importantly, these officials are not objective, but rather deeply invested in the success of Korean immigrant entrepreneurship, and thus make arguments that jus- tify making loans to Korean immigrant entrepreneurs. For these reasons,Nopper’s articleneeds tobequalified.More importantly,bothNopper

as critic and the scholars she criticized are at fault in making an illogical argument in which they equate high rates of self-employment with immigrant success in the small business realm, as well as with achieving upward social and economic mobility in the USA.

References

Ahn, H.-H., Choi, M. and Chung, Y.-S. (2009) The Development of Korean American Banks in California. E.-Y. Yu et al. (ed.) Korean American Economy and Community in the 21st Century, pp. 229–52. Korean American Economic Development Center: Los Angeles, CA.

Bates, T. (1997) Financing Small Business Creation: The Case of Chinese and Korean Immigrant Entrepreneurs. Journal of Business Venturing 12(2): 109–25.

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Light, I. and Bonacich, E. (1988) Immigrant Entrepreneurs: Koreans in Los Angeles,1965–1982. University of California Press: Berkeley, CA.

Nopper, T. (2010) Colorblind Racism and Institutional Actors’ Explanations of Korean Immigrant Entrepreneurship. Critical Sociology 36(1): 65–85.

Park, K. (1997) The Korean American Dream: Immigrants and Small Businesses in New York City. Cornell University Press: Ithaca, NY.

Stack, C. (1974) All Our Kin: Strategies for Survival in a Black Community. Harper and Row: New York, NY.

For correspondence: Kyeyoung Park, Department of Anthropology, University of California, Los Angeles, 341 Haines Hall, Box 951553, Los Angeles, CA 90095–1553. Email: [email protected]

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