Turkish-Dutch Entrepreneurs in International Business

TURKISH-DUTCH ENTREPRENEURS IN INTERNATIONAL BUSINESS RESEARCH REPORT TO BE PRESENTED AT THE HOGIAF MEETING 29 NOVEMBER 2010 KURHAUS, THE HAGUE

Authors: Martijn Boermans, Necla G端nay, Hylda Kuiper van Amstel, Hein Roelfsema* Hogeschool Utrecht University of Applied Sciences Utrecht Corresponding Author: Hein Roelfsema, hein.roelfsema@hu.nl, www.ibi.research.hu.nl

Nederlandse samenvatting De afgelopen jaren is er veel aandacht geweest voor de positieve rol die Turks-­‐Nederlandse ondernemers spelen in de Nederlandse samenleving. De studie die op de HOGIAF vergadering 2009 is gepresenteerd benadrukt de bijdrage van Turks-­‐Nederlandse ondernemers aan de Nederlandse economie, bijvoorbeeld in termen van werkgelegenheidcreatie. Recente gegevens van het CBS geven de geslaagde integratie van minderheden weer en de rol die ondernemerschap daarbij speelt. Daar waar twintig jaar geleden Turks-­‐Nederlands ondernemerschap nog vaak werd gedreven door economische noodzaak in het levensonderhoud te voorzien is de jongere generatie hoger opgeleid maar nog steeds aangetrokken door ondernemerschap. Deze generatie is steeds meer actief in zakelijke dienstverlening en innovatieve sectoren Door de steeds prominentere positie van Turks-­‐Nederlandse ondernemers in de Nederlandse samenleving in samenhang met de opkomst van Turkije als handelspartner van Nederland, is het van belang beter zicht te krijgen welke rol Turks-­‐Nederlandse ondernemers spelen in de handelsrelaties tussen Turkije en Nederland. Als deze rol inzichtelijk gemaakt kan worden, dan kan ook beter worden bezien op welke wijze de Turks-­‐Nederlandse ondernemersgemeenschap kan bijdragen aan het verder versterken van die relaties.

In dit rapport wordt deze nieuwe uitdaging opgepakt. Medewerkers van de onderzoeksgroep International Business and Innovation van Hogeschool Utrecht leggen bloot hoe Turks-­‐Nederlandse ondernemers zich een weg vinden in handel met Turkije, hoe die relaties zich in de tijd ontwikkelen, en welke factoren belangrijk zijn voor het slagen van handel met Turkije. Het onderzoek bestaat uit drie gedeelten, dan wel stadia. In het eerste stadium zijn tien Turks-­‐Nederlandse ondernemers uitgebreid persoonlijk geïnterviewd, waarna case studies van hen en hun bedrijf zijn opgesteld. In het tweede stadium, voortbouwend op de eerste fase, zijn 45 Turks-­‐Nederlandse ondernemers telefonisch geïnterviewd, waarbij hun antwoorden op 84 vragen zijn gescoord op een 1-­‐5 Likert-­‐scale. In het laatste stadium zijn zeven experts geïnterviewd met als doel hen mogelijke initiatieven voor te leggen die het voor de Nederlandse samenleving mogelijk maken de entrepreneurial skills en kennis van de Turks-­‐ Nederlandse ondernemersgemeenschap te gebruiken voor het versterken van de Turks-­‐Nederlandse handelsrelaties.

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Het onderzoek leidt tot de volgende uitkomsten.

1. Opvallend is dat de meest internationaal geslaagde groep Turks-­‐Nederlandse ondernemers vooral veel handel drijft met andere Noord-­‐Europese landen, waarbij zij vaak gebruik maken van een etnisch Turks netwerk. Vele ondernemers geven aan dat ze wellicht cultureel dicht staan bij Turkije, maar dat zij de zakencultuur van Europa prefereren. Voor de internationaal geslaagde ondernemers is handel met Turkije vaak niet de eerste stap. Deze ondernemers zitten meer in innovatieve sectoren, zijn in Nederland geboren en bezitten een goed zakelijk netwerk in Nederland.

2. In handel met Turkije zijn vooral de ondernemers die via gezinshereniging naar Nederland zijn gekomen succesvol. Dit is een ondernemende groep die vaak goed is opgeleid, maar in een achterstandpositie zonder economische basis met hun bedrijf is gestart. Deze groep drijft veel handel met Turkije en heeft nog steeds een goed sociaal netwerk in Turkije. Deze groep is eerder ondernemend dan innovatief en zit relatief veel in detail-­‐ en groothandel.

3. Een substantieel aantal van de Turks-­‐Nederlandse ondernemers internationaliseert zijn bedrijf zeer snel na de oprichting (binnen drie jaar). Voor een groot gedeelte van deze groep is handel met Turkije wel een natuurlijke eerste stap. Door de culturele nabijheid van Turkije en goede contacten kan een substantieel gedeelte van de Turks-­‐Nederlandse ondernemers dus sneller internationaliseren dan vergelijkbare autochtone ondernemers.

4. Een belangrijk effect voor de bedrijven die handelen met Turkije en dat in de tijd snel gaan doen, is dat dit hen in staat stelt internationaal te verbreden naar andere landen. Internationale netwerken en leren van experimenten spelen daarbij een belangrijke rol. Echter, het verschil tussen ondernemers die alleen handel drijven met Turkije en de groep die handel heeft weten te verbreden, is dat de laatste groep in staat is gebleken het steunen op sociale netwerken om te zetten in het smeden van zakelijke netwerken.

5. Turks-­‐Nederlandse ondernemers hechten veel belang aan de ondersteuning die ze kunnen krijgen van Nederlandse publieke instellingen. Echter, de beoordeling van deze diensten is matig. Hierbij moet worden opgemerkt dat internationaal actieve ondernemers deze diensten significant hoger beoordelen dan de niet internationaal actieve ondernemers. Daarbovenop geven veel ondernemers aan dat zij hun eigen organisatie vooralsnog prefereren bij het inwinnen van informatie en contacten.

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6. Uit het onderzoek komt naar voren dat er een toenemend belang moet worden gegeven aan de rol voor de Turks-­‐Nederlandse ondernemersgemeenschap voor het naar de Nederlandse markt halen van Turkse ondernemingen. Daarnaast is het van belang om binnen Europa samenwerking van Turkse organisaties te versterken.

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Table of contents Section I: Summary in English ...................................................................................................................... 5 Türkçe özet .................................................................................................................................................. 7 Section II: Stylized Facts and Theoretical Background ................................................................................. 9 Trade and Investment Flows between Turkey and the Netherlands ....................................................... 9 Turkish-­‐Dutch Entrepreneurs and International Trade .......................................................................... 12 Research Questions ............................................................................................................................... 15 Research Method ................................................................................................................................... 16 Section III: Exploratory and Case Study Results ......................................................................................... 17 Section IV: Survey Results .......................................................................................................................... 21 Internationalization ............................................................................................................................... 21 Exporting to Turkey ................................................................................................................................ 22 Importing from and outsourcing to Turkey ........................................................................................... 22 Synthesis ................................................................................................................................................ 23 Section V: Positioning of Turkish-­‐Dutch Entrepreneurs ............................................................................. 26 Section VI: Recommendations ................................................................................................................... 27 Entrepreneurs ........................................................................................................................................ 27 HOGIAF .................................................................................................................................................. 28 Public Institutions .................................................................................................................................. 28 References ................................................................................................................................................. 29

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Section I: Summary in English

In recent years, much emphasis has been placed on the entrepreneurial role of Turkish-­‐Dutch (TD) citizens in Dutch society. The study of Utrecht University for HOGIAF presented at last year's conference, highlights the contribution of TD entrepreneurs to the Dutch economy, for example in terms of job creation. Recently, the growing importance of Turkey as a large emerging market -­‐ and important trading partner for the Netherlands -­‐ raises attention for the role that ethnic entrepreneurs of Turkish origin play in shaping and supporting Turkey-­‐Dutch trade relations.

This report takes up this challenge and investigtes internationalization of Dutch-­‐Turkish entrepreneurs in. HOGIAF has asked the research group for International Business and Innovation of HU University of Applied Sciences to investigate how Turkish origin affects international trade patterns of TD firms, so as to shred light on the contribution of TD entrepreneurs to trade relations between Turkey and the Netherlands. The research project consists of three stages. In the first stage, 10 TD entrepreneurs are interviewed in-­‐depth and case studies are written. In stage two, and based on the findings in stage one, 45 TD entrepreneurs are interviewed over the telephone to complete a survey consisting of 84 questions, most on a Likert scale of 1 to 5. In the last stage, 10 experts are interviewed on potential initiatives to make better use of TD entrepreneurial skills and knowledge for supporting the Turkish-­‐ Dutch trade relations.

The following results stand out.

1. Data reveal similar descriptive patterns of internationalization of firms as commonly found in the literature. That is, firms that engage in international business and trade with Turkey are larger and more innovative.

2. The case studies reveal a strong positive connection between education and international activities, however, this is not confirmed in the aggregate survey data, possibly because of elemination of the selection bias in the data.

3. Since psychic distance is important to make the first step in international trade, it is expected that TD entrepreneurs face lower barriers than their Dutch counterparts do. Indeed, for many TD entrepreneurs, firms in Turkey are important trading partners. However, a substantial number of firms that trade with Turkey have previous experience in international trade. In addition, a number of TD firms that start international trade with Turkey extend these relations 5

to other countries and regions. From a policy perspective, this suggests that TD entrepreneurs may not be treated differently from their Dutch peers, in that public support with respect to market knowledge and internationalization knowledge is also needed for TD entrereneurs entering European markets. The exception is the Turkish market itself, since the large majority of respondents (both traders and non-­‐traders) report that they have a good knowledge of the Turkish market for their products.

4. A substantial number of TD firms are so called 'born globals' in that they engage in international trade immediately after inception of the firm. For these firms, the links with Turkey are an important stepping stone and leverage point for internationalization.

5. Networks potentially play an important role in the trade relations of TD entrepreneurs. The data show that that traders and non-­‐traders do not differ in the strength of their Dutch networks (Ethnic or Dutch) and on average not in their social networks in Turkey. What matters for trade with Turkey is formal and informal business networks. This seems to suggest that work is to be done to upgrade social ties into business relations.

6. TD entrepreneurs whose personal background is that they have entered the Netherlands through family reunification programs seem especially successful in trade with Turkey when compared to TD entrepreneurs of the first, second, and third generation. A key element may be that this group has a higher level of education and has strong social networks in Turkey, even though education and social networks are on average not associated with internationalization.

7. In general, activities of public agencies, umbrella organizations, and interest groups are judged as important in supporting trade relations with Turkey. The GAP analysis shows that respondents see room for improvements, especially in matchmaking and training. However, there is a clear difference between traders and non-­‐traders with Turkey. For traders this gap (the perceived under performance of supporting agencies) is much smaller than for the non-­‐ traders, so that policy should focus more on bringing support activities closer to the non-­‐traders.

For policy recommendations, the reader is referred to Section 6 of the report.

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Özet

Son yıllarda Türk kökenli Hollandalı girişimcilerin rolü Hollandalı topluma katkısı sayesinde daha ön plana çıkmaktadır. Utrecht Üniversitesi tarafından HOGIAF için hazırlanan ve geçen yıl ki konferansta sunulan makalede Türk kökenli Hollandalı girişimcilerin iş yaratma açısından Hollanda ekonomisine katkısı ve önemi vurgulanmıştır.

Son zamanlarda hızla gelişen piyasa olarak Türkiye'nin artan önemi ve Hollanda için önemli bir ticaret ortağı olması, Türkiye-­‐Hollanda ticari ilişkilerini kurma ve destek açısından Türk kökenli girişimcilere ilginin artmasını sağlamıştır. Uygulamalı Bilimler Fakültesi (Hogeschool Utrecht) Uluslararası Ticaret ve Araştıma Geliştirme Grubu araştırmacıları tarafından yapılan araştırmada, Türk kökenli Hollandalı girişimcilerinin Türk kökenli olmalarının uluslararası ticaret ilişlikerini ne denli etkiledigi vurgulanmıştır.

Araştırma üç aşamadan oluşmaktadır. İlk aşamada 10 Türk kökenli Hollandalı girişimci ile kişisel röportaj yapıldıktan sonra vaka çalışmaları yapılmıştır. İlk aşamadaki bulgulara dayanılarak ikinci aşamada bir çoğu 1-­‐5 likert ölçeği içeren 84 sorudan oluşan bir anket formu hazırlanmıştır ve bu anket formu 45 Türk kökenli Hollandalı girişimciye telefon aracılığı ile sorulmuştur.

Son aşamada ise Türkiye Hollanda ticari ilişkilerini güçlendirmek ve Türk kökenli Hollandalı girişimcilerin bilgi ve becerilerini daha iyi kullana bilmeleri için Türk ticari ilişkilerinde uzmanlaşmış 10 kişi ile görüşmeler yapılmıştır.

Aşağıdaki sonuçlar ön plana çıkmaktadır: 1. Veriler uluslararasılaşma stratejilerinin bu konuda mevcut olan literatür doğrultusunda uygun şekilde yürütüldüğünü göstermektedir. Uluslararası ticaretle iştigal eden ve Türkiye piyasasına erişmiş olan şirketlerin daha yenilikçi ve büyük olduklarını göstermektedir.

2. Vaka çalışmaları, eğitim ve uluslararası faaliyetler arasında güçlü bir bağlantıyı ortaya çıkartmıştır ancak, bu bağlantı telefon görüşmelerinde yapılan anket sonuçlarına yansımamıştır, muhtemelen sonuncusunda seçilme önyargısı olmadığı içindir.

3. Pisişik mesafe uluslararası ticarette ilk adım açısından önemli olduğudan Türk kökenli Hollandalı girişimcilerin Hollandalı meslektaşlarına nazaran daha düşük engellerle karşı karşıya kalmaları beklenmektedir. Nitekim, birçok Türk kökenli Hollandalı girişimciler için Türkiye'deki firmalar önemli ticaret ortakları olarak görülmektedirler, ancak bu firmaların çoğunun Türkiye ile ticarete 7

başlamadan önce uluslararası ticarette deneyime sahip oldukları gözlenmektedir. Aynı zamanda Türkiye ile ticaret yapan Türk kökenli Hollandalı girişimcilerin genellikle ticari ilişkilerini başka ülkelerle genişlettiği ortaya çıkmıştır. Politika perspektifinden bakıldığında piyasa bilgisi için kamu desteği ve uluslararası olma konusunda Hollandalı meslektaşlarından farklı muamele görmemelidirler. İstisna Türk pazarının kendisidir çünkü katılımcıların büyük çoğunluğu kendi ürünleri için Türk piyasasında iyi bir bilgiye sahiptirler.

4. Türk kökenli Hollandalı firmalarının önemli bir kısmı firmanın kuruluşundan hemen sonra uluslararası ticaretle iştigal ettikleri için bu firmalara 'born globals' denmektedir. Bu tür firmalar için Türkiye ile bağlantıları önemli bir basamak ve uluslararası olma yolunda büyümek için iyi bir yoldur.

5. İletişim ağı Türk kökenli Hollandalı girişimcilerin ticari ilişkilerinde önemli bir rol oynamaktadır.

Veriler Hollanda piyasasında ya da uluslararası piyasalarda aktif olanlar ve olmayanlar arasında Hollandaca iletişim ağılarında ya da Türkiyedeki sosyal iletişim ağlarında büyük farklılıklar olmadığını gösteriyor. Türkiye ile uluslararası ticarette önemli olan resmi ve gayri resmi iş ilişkileridir. Bu da sosyal iletişim ağının ileride iş iletişim ağına dönüşmesi gerektiğini gösteriyor.

6. Aile birleşimi yoluyla Hollanda'ya gelen Türk kökenli Hollandalı girişimcilerin, birinci, ikinci ve üçüncü kuşağa nazaran Türkiye ile ticarette daha başarılı oldukları gözlenmektedir. Temel unsur olarak bu grubun eğitim düzeyinin daha yüksek olması ve Türkiye'de güçlü bir sosyal ağa sahip olmaları olarak gösteriliyor.

7. Kamu kuruluşları ve çıkar gruplarının faaliyetleri Türkiye ile ticari ilişkilerini desteklemede önemli rol almaktadırlar. GAP analizinin sonuçlarına göre katılımcıların eğitim, gelişme ve matchmaking sürecinde yardıma ihtiyaç duydukları görülmektedir. Ancak, Türkiye ile ticaret yapan ve yapmayan girişimciler arasında açık bir fark olduğu gözükmektedir. Türk piyasasına erişenler için bu boşluk (destekleyici kurumların yardımları sayesinde) erişmeyenlere nazaran daha azdır, bu da devletin bu piyasaya erişmemiş girişimcilere daha yakın destek vermesi gerektiğini göstermektedir.

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Section II: Stylized Facts and Theoretical Background Trade and Investment Flows between Turkey and the Netherlands The last ten years trade between Turkey and the Netherlands has ballooned. Clearly, the 2008 financial crisis interrupted trade relations, but preliminary data for 2010 show a renewed increase in trade activity. However, the nature of trade flows between Turkey and the Netherlands has changed dramatically over the recent decade. Figure 2.1 below shows that where trade in primary products remained at a low base, trade in manufactured products rose substantially. In addition, in contrast to the popular wisdom, Dutch manufacturing exports to Turkey rose faster than exports of Turkey to the Netherlands, reflecting the high growth in demand in the Turkish economy and the overall size of the Dutch export sector.

Figure 2.1: Export Trends 4500000 4000000

Primary Exports Turkey

3500000

-­‐

3000000

Manufactures ExportsTurkey

2500000 2000000

Primary Exports Netherlands

1500000 1000000

Manufactures Exports Netherlands

500000 0 1 2 3 4 5 6 7 8 9

Source: UNCTAD, TRAINS database

Within manufacturing trade, there is a trend of upgrading of Turkish exports to the Netherlands. Table 2.1 shows the eight strongest growing sectors, where only sizeable trade flows are considered. As can be seen, within trade relations especially medium skilled inputs and assembled products are exported from Turkey to the Netherlands. By contrast, the strongest rise in Dutch exports is found in specialized equipment.

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Table 2.1

Netherlands-­‐Turkey

2000 2004

2009

Change 2004-­‐2008

1859

16431

29143

19364

1568

Office machines

3990

8521

92813

90590

72233

1063

Tools for use in the hand or in machine

3007

2517

9394

21774

13349

865

Baby carriages, toys, games & sporting goods

6766

4086

8702

32027

16346

784

Pumps (excluding liquid), gas compressors & fans; centr.

9441

8460

25905

34919

26143

413

Agricultural machinery (excluding tractors) & parts

2995

4337

12751

17272

12601

398

Internal combustion piston engines, parts, n.e.s.

6170 10126

26940

35826

26871

354

24302

345

Parts & accessories of vehicles of 722, 781, 782, 783

5639

9560

Turkey-­‐Netherlands

2000 2004

Sugar, molasses and honey

2008

665

Non-­‐electric parts & accessor. of machinery, n.e.s.

2007

23011

32977

2007

2008

2009

Change 2004-­‐2008

623

814

1106

26329

16185

3236

Specialised machinery

3357

4141

20894

27319

21157

660

Fish, fresh (live or dead), chilled or frozen

4651

8565

36871

50053

50548

584

Tubes, pipes & hollow profiles, fittings, iron, steel

4310 11883

38484

52561

23625

442

Ships, boats & floating structures

3810 33886

90477

147150

66709

434

Heating & cooling equipment & parts thereof, n.e.s.

120

3679

5169

12950

14437

352

Plates, sheets, films, foil & strip, of plastics

773

4671

11402

16069

16186

344

Plastics in non-­‐primary forms

945

5682

12914

18266

17565

321

Source: UNCTAD TRAINS database

Table 2.2 depicts service sector exports and imports of the Turkish economy. Due to tourism, for long Turkey has been a net exporter of services. However, the rise in domestic economic activity recently has increased imports of services. Although data availability do not allow us to investigate the origin of service trade, most notable is the increase in business services imports in Turkey. As a conclusion, Turkey is a growing exporter in travel services and has become an interesting market for business services such as accounting and consulting.

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Table 2.2: Service Imports of Turkey ($ 1000) YEAR Total services Transport Travel Other services Communications Construction Insurance Financial services Computer and information Royalties and licence fees Other business services Cultural

2000 6098 2021 1738 2339 102 31 282 722

119 330 288

2001 6161 1934 1880 2347 72 15 372 621

107 322 205

2002 2003 2004 2005 2006 2007 2008 7502 10163 11505 11990 15683 17875 16913 2707 4331 4861 4601 6905 7927 6545 2113 2524 2872 2743 3260 3506 4147 2682 3308 3772 4646 5518 6442 6221 231 207 228 299 305 298 247 61 19 8 57 97 172 189 622 839 891 1140 1544 1436 1200 374 377 386 524 623 978 826

15 26 32 30 167 362 439 531 647 729 648 298 353 538 723 1029 1378 1568 117 176 88 106 111 181 207

Source: UNCTAD, TRAINS database.

With respect to investment flows, it is well-­‐known that Turkey has been able to attract a substantial share of world foreign direct investment, see figure 2.2. Both as a percentage of fixed capital formation as well a share of exports, foreign capital plays an important role in the development of the Turkish economy. More recently, Turkey has become a foreign investor in its own right. Partly due to a fall in the overall level of FDI, the share of Turkey in world FDI has been rising the last three years. The implication is that Turkey, as well as other large emerging markets, has become more important as a potential source of FDI for the Netherlands.

Figure 2.2. Turkey: Inward and outward FDI as percentage of world FDI, indexed trends 1.8 1.6 1.4 1.2 1

Outward FDI

0.8

Inward FDI

0.6 0.4 0.2 0 1

2

3

4

5

6

Source: UNCTAD, TRAINS database.

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7

8

9

10

The overall picture is one of increasing interaction between Dutch and Turkish firms, especially in high value and innovative sectors. On top of that, a growing Turkish economy provides good opportunities for service exports from the Netherlands. Lastly, large emerging markets play an increasingly important role as investors in developed economies.

Turkish-­‐Dutch Entrepreneurs and International Trade Clearly, it is impossible to quantitatively assess the role of Turkish-­‐Dutch (TD) entrepreneurs in macro trade flows. For this reason, this study focuses on the role that TD entrepreneurs play in trade flows between Turkey and the Netherlands and what the increases in trade flows mean for TD entrepreneurs.

To this end, this section gives a short introduction into academic literature that deals with internationalization, with the aim to provide a theoretical lens through which to view TD international entrepreneurship.

Ownership Location Internalization (OLI) Based on the seminal insights from Dunning (1980), the ownership-­‐location-­‐internalization framework provides an eclectic approach to analyze the internationalization process of firms. Ownership means that firms that successfully engage in international trade often have a specific competitive advantage that is ‘owned’ by the firm. Ownership may come through patents, tacit knowledge generation within the firm, and specific access to local resources. Often the ownership advantage refers to innovative capacity of the firm, as it is closely linked to the knowledge infrastructure of the country. Location advantage refers to the observation that certain foreign locations are well suited to exploit the ownership advantage. This helps to explain the geographical pattern of the firm’s international expansion. Internalization refers to the ‘make or buy’ decision. Whether or not a firm uses foreign subsidiaries or external parties is related to the ability and desire to keep the competitive advantage within the firm’s boundaries. The theory thus predicts that there is a relation between the ownership advantage and the firm’s mode of foreign market entry and its collaborative strategies.

Based on OLI characteristics, the OLI theory also gives a prediction for the motives for foreign market entry. These motives may be market seeking (increasing the firm’s sales), efficiency seeking (reducing costs by shifting the location of production), resource seeking, and strategic asset seeking. In general, firms from developed countries often are market-­‐ and efficiency seekers in emerging markets, whereas the initial motives of firms from emerging markets is to get access to strategic assets, often related to specific knowledge pools.

Earlier studies show that TD entrepreneurs due to lack of knowledge resources start their business in sectors in which international firm specific competitive advantages do not play a strong role, such as in small business retail activities, bars, restaurants, travel, and business services. However, over time TD entrepreneurs have entered other sectors, especially in the service sector and IT. Of these two, the service sector entrepreneurs often focus on the domestic market, in many cases serving other TD entrepreneurs (Sahin et al. 2007). In manufacturing, and especially knowledge intensive sectors, innovation often calls for entering global niche markets. Hence, we expect the group of entrepreneurs in the IT sector to have innovative ownership advantages, that can be leveraged through international activities.

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Clearly, TD entrepreneurs have a locational advantage in trade with Turkey, since on average they may have strong connections with their family’s country of origin. However, they must also have an ownership advantage that is especially suited to exploit in Turkey. Whether or not TD entrepreneurs in that case go for exports, joint ventures, or subsidiaries depends on their ability to protect their competitive advantages. In practice, for some entrepreneurs internalization means a temporary relocation to Turkey to set up the business, or to involve trusted family members in doing so. Given that Turkey is a large emerging market and has low labor costs, it may be expected that market seeking and efficiency seeking motives dominate.

Link Leverage Learn (LLL) It is often argued that firms from emerging markets lack the ownership advantages that enable them to engage in international trade. However, recently many highly competitive firms from emerging markets have entered the global trade arena. Instead of a static framework of OLI, a dynamic framework is suggested to explain the pattern of internationalization of firms from emerging markets. The process starts with a link to a producer from a developed country, often through outsourcing and OEM contracts, joint ventures, or import licenses. From the contractual relationship, the firm in the emerging market is able to leverage its core competences and engages in activities that provide a higher value added to the relationship. This upgrading of activities allows the firm to learn about international trade, which over time propels it to find customers outside the initial contractual relation with its original partners.

There may be indirect mechanisms from the LLL framework that explain the rise of TD entrepreneurs in international trade. Many of the entrepreneurs may not start with strong ownership advantages in trade with Turkey, however, they may have had good links with native Turkish entrepreneurs. Over time, this allows them to leverage their competencies within this relation, possibly their superior access to knowledge and trade finance. Then they start developing specific ownership advantages and start exploring these in Turkey as well as in other markets. The LLL framework also provides a conceptual framework to explain trade of Turkish entrepreneurs with the Netherlands. They start with links to TD entrepreneurs as well as to native Dutch firms, often as low cost producers. Over time, they create stroing competitive advantages in economies of scale and modification. This allows them to find new customers in the Netherlands.

The Uppsala Internationalization Model The spirit of the OLI model is that firms make highly rational decisions under complete information when they engage in international activities. This may be true for large firms, however, for small firms bounded rationality, learning, and imperfect information play a significant role. Following Johanson and Vahlne (1977) a large literature describes the behavioral process of internationalization of the firm as a dynamic and stage process following a patterns of experimentation, learning, to increased commitment.

The process is that the internationalization of SMEs often starts with incidents and personal contacts.

These experiments give rise to international activities with low levels of foreign market commitment.

Over time, the entrepreneur increases his knowledge of the foreign market, which induces him to take on higher levels of commitment, which in turn increases knowledge through learning. The results are

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higher levels of foreign market commitment, through modes of entry that show such higher levers (e.g. from exports to fully owned subsidiaries) and a geographical expansion of foreign activities.

With respect to the initial experimental stages of internationalization, psychic distance plays an important role. This term reflects the empirical observation that firms often start trading with partners in countries to which personal, cultural and institutional distance is small. This may mean bordering countries, however, for Anglo-­‐Saxon entrepreneurs there is evidence that low psychic distance fosters trade between English speaking countries. The stage model thus potentially offers an appealing model to analyze internationalization processes of TD entrepreneurial firms. Ties to entrepreneurs in Turkey as well as links to ethnic Turkish entrepreneurs in other European countries may give rise to many international trade experiments. These experiments with low commitment (an initial export order, for example), provides the opportunity to get to know the foreign market, obtain first-­‐hand insights of its potential, which result in stronger foreign market commitment.

Born global and networks The insights from the stage model have been challenged as to lack predictive power for the internationalization process of knowledge intensive firms. The reason is that these firms often produce for global niche markets, so that they operate internationally from inception (Oviatt and McDougall 1994). A key element is the role of networks in the internationalization process. In most cases of successful internationalization, senior management of the firm has prior experience in internationalization and has a strong international social-­‐ and business network. This network plays an important role in the start-­‐up phase of the frm, as in knowledge intensive industries resource sharing in networks allows the use of competitive advantage, and allows the firms to concentrate on the dynamic acquisition of technological core competences.

TD entrepreneurs may have properties that relate to the insights from the born global literature. It is often argued that TD entrepreneurs have strong networks in Turkey and Europe that they may be able to leverage through international trade. These networks may make them able to concentrate on key core competences, especially trough outsourcing activities. In addition, for Turkish entrepreneurs a domestic market for high value added products may be lacking, so that ethnic networks in the European market provide incentives for early internationalization of firms.

International entrepreneurship More recently, the emergence of the academic entrepreneurship literature puts even greater emphasis on the behavioral aspects of internationalization. Empirical studies show that entrepreneurial attitudes explain which firms internationalize and which do not. The most common entrepreneurial traits are the focus on innovation, proactive behavior and controlled risk taking. Clearly, international entrepreneurship can be combined with stage theory insights, in that persons with strong entrepreneurial attributes are often the first to experiment and jump the hurdle of psychic distance. For example, we may expect this effect to be particularly relevant for entrepreneurs that have entered the Netherlands later through reunification programs.

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Many studies document the strong entrepreneurial drive of TD citizens. Consistently, this group tops the list of firm start-­‐ups, in percentage outnumbering even the native Dutch. For an excellent and exchaustive study on ethnic entrepreneurship and rich data, the reader is referred to the paper by Mediha Sahina, Peter Nijkampa, and Marius Rietdijk (2007) and the references therein. In general, although older studies document the necessity based entry into entrepreneurial activity due to labor market restrictions, more recent papers stress opportunity based (innovative) entrepreneurial activity of TD citizens. Hence, we may expect that such innovative entrepreneurship also spills-­‐over into international entrepreneurship.

Research Questions To explain the roles the TD entrepreneurs play in trade between Turkey and the Netherlands, the theoretical lens above provides us with some guidance where to start looking for relations. Given data availability, we stop short of formulating hypotheses. Instead, below we discuss some groups of characteristics of TD entrepreneurs that may help explain the roles these entrepreneurs play in international trade.

Story 1 The resource base of entrepreneurs matters a great deal for their opportunities to engage in international trade. Innovative firms, with owners that have a high level of education will be more inclined to internationalize their firms and do this quicker. Entrepreneurial attitudes also matter, in that risk attitudes, and proactive behavior are associated with higher levels of international activity. Lastly, personal background matters. Some entrepreneurs may be forced by language-­‐ and cultural barriers to seek internationalization quicker than persons that are able to integrate quickly in Dutch society.

Story 2 International trade is a network business. Entrepreneurs with good networks have a major advantage to enter other markets. However, there are different types of networks and it is unclear which networks play an important role in trade between Turkey and the Netherlands. It is often stressed that domestic networks with native entrepreneurs as well as other TD entrepreneurs are an important prerequisite for success, which is likely to spill-­‐over to international activities. Moreover, networks in Turkey, both informal and formal, are needed for success. Hence, a substantial number of TD entrepreneurial firms are born globals, even when they are not in knowledge intensive sectors.

Story 3 Close contacts with Turkish entrepreneurs in Turkey and in Europe make it likely that TD entrepreneurs engage in internationalization experiments more than their native peers. Especially, educated entrepreneurs have the ability to learn from these experiments, which increases their foreign market commitments. Business may start with low foreign market commitment through social contacts, however, over time they deepen and broaden, which in turn magnifies the social and business network.

It is important to note that these stories are not rival. They should be considered as story lines 'within the book’, which cross at times and provide synergy. For example, entrepreneurs with a strong

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knowledge base may have better networks, which makes them early experimenters with internationalization.

Research Method This report uses a rather standard social science research strategy. The first step is to create a theoretical lens through desk research, described in the previous section. The lens makes use of two bodies of literature. The first is the theory of the internationalization of the firm. The reason is that we expect that the forces described in this literature also apply to TD entrepreneurs, with modifications that take account of the specific ethnic characteristics of the group. The second body of literature is that on entrepreneurship. Since TD firms are often characterized as entrepreneurial, it is to be expected that such entrepreneurial traits play an important role in explaining internationalization of TD firms.

The second step is exploratory research on the issues that play a role. To do this, case study research is the most appropriate method. With the help of HOGIAF and then using the snowball effect, 10 CEOs were selected who have different levels of success and experiences with international trade, see Eisenhardt (1989). To interview these entrepreneurs, a semi-­‐structured questionnaire was set up, that allowed for much freedom in answering, so as to ground certain insights. Detailed case studies were written from which a rich set of insights in TD international entrepreneurship emerged.1 In a third phase, the insights from the case studies and the literature review are translated into a survey questionnaire consisting of 84 questions. Over 100 entrepreneurs were identified from a list of TD entrepreneurs. The selection process took into account that many SMEs are not engaged in international trade, so that fully randomizing would provide unbalanced samples. To avoid this, 20 firms of which there was prior knowledge that they are internationally active were approached and the rest was a random draw, so that a stratified sample results, based on internationalization. The entrepreneurs were interviewed over the telephone to avoid that surveys are scored by lower ranking personnel, and then scored by the interviewer. Each interview took on average 50 minutes, and in total 45 entrepreneurs were interviewed.

The last research stage consisted of a shortened Delphi confrontation of the policy implications of the study. In the process, the researchers have come across many knowledgeable persons with respect to trade between Turkey and the Netherlands. These experts were given four questions on the relations between Turkey and the Netherlands and the role that TD entrepreneurs may play in this relation. Each respondent was asked in each question to rate four alternatives and reflect on the rating that the other experts would give. The assumption is that true experts not only know 'the right' rating, but also have a better idea about the average opinion of their peers. Also, these experts with each question were asked to give an alternative, so as to collect ideas on how to bring trade relations forward.

1

We have choosen not to include these question sets in the report. All questions and results are fully available upon request. Names of case studies and respondent are never provided.

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Section III: Exploratory and Case Study Results

In the second phase of the research process, ten Turkish-­‐Dutch entrepreneurs were selected and interviewed in depth on the main issues of this research. The aim of this exploratory research is to get insights and ideas in order to be able to develop hypotheses about Turkish-­‐Dutch international business activities in Turkey and the role that the Turkish-­‐Dutch business community plays with attracting and facilitating Turkish companies to invest in or export to the Netherlands. The length of the interviews was 1.5 to 4 hours and out of these interviews came ten different stories about their entrepreneurial lives with their factors of success, problems, best practices, insights and experiences. All ten entrepreneurs had successful businesses in the Netherlands and all were involved in international business e.g. trhough importing, exporting, joint ventures, or by taking over a company abroad. The main research questions to be answered and tackled by this exploratory research are: 1. What are the reasons and explanations for successful entrance of Turkish-­‐Dutch companies on the Turkish market? What are the most frequently used and the best ways for entering this market?

2. What is the potential of the Turkish market for Turkish-­‐Dutch companies? In addition, which entry modes are the best practices?

3. What are the gains out of these international trade relations of Turkish-­‐Dutch companies for the Dutch business and economy?

4. What role do the networks play? Which role do Turkish-­‐Dutch companies and network play in facilitating Turkish companies that want to invest or enter the Dutch market?

5. What is the best way for the Turkish-­‐Dutch Business Community to position themselves towards the stakeholders in the Netherlands and Turkey?

6. What is the best way to support the Turkish-­‐Dutch companies in their international trade relations with Turkey?

The results of the exploratory research All entrepreneurs were involved in different businesses such as ICT, temporarily employment agencies, glass fiber network contracting, wholesale and retail in Turkish furniture. Table 3.1. gives an impression of the diversity of the ten entrepreneurs based on personal characteristics and their businesses. Even though all companies were involved in international business, the sales on the Dutch market for eight of the companies were more than 70% of total sales. Therefore, the business on the Dutch market for most of these entrepreneurs is their main business.

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Table 3.1: Summary case characteristics Age

20 to 62 years

Gender

2 female and 8 male

Number of employees

1 to 85

Number of companies owned by the entrepreneurs Place of birth

1 owned only one company, 9 owned multiple companies

University and higher professional education Geographical locations

7 entrepreneurs

Involved in international business

2 only import, 8 import, export, international partnerships and takeovers 8 Members and 2 none members of HOGIAF

HOGIAF members

8 in Turkey and 2 in the Netherlands

Amsterdam, Eindhoven, Utrecht, the Hague, Turkey

Most frequent language spoken in the company

Dutch in 8 companies, Turkish in 2 companies

Technological innovative business

3 companies

Dutch network available for business

3 companies

Successful business activities of the entrepreneurs on the Dutch market All entrepreneurs that are involved in business at the Dutch market are quite successful. Most of the entrepreneurs that started their business 10 to 20 years ago had to work very hard from the start in order to make their business successful. The main problems that they had to tackle were: the development of their network, unfamiliarity with the Dutch language and business culture, to prove their reliability to their customers and to build their business reputation. The success factors of their business in the Netherlands that these entrepreneurs mention are reliability, more and a higher quality of service than their competitors, the good quality of their products and for some a better price for good quality products. In this group of entrepreneurs all had taken the largest part of their education in the Netherlands. They had to prove themselves to their environment. The Dutch spoken language of most of them was good, but some were less fluent. On the other hand, the three entrepreneurs that had taken their complete education in the Netherlands had a less tough start of their company. The success factors that these entrepreneurs mentioned for the Dutch market are innovation, flexibility, reliability to their customers, long term planning and thinking, and discipline.

When asked what they especially liked about the Netherlands, they state that it is the opportunities that had to start their own businesses, the excellent Dutch education system for themselves and their children, and the way of doing business in the Netherlands. Interesting is that all Turkish-­‐Dutch entrepreneurs prefer the Dutch business culture to the Turkish and give as a motivation the reliability of the financial payments, the honoring of the agreed obligations in time, and the possibility to do business within a relatively short time period.

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When we look at the business partners and business networks in the Netherlands then seven entrepreneurs mentioned the Turkish-­‐Dutch network as their main business network, and the majority mentioned that their most important business partners were members of the TD community. Only three companies had a strong Dutch network besides the Turkish-­‐Dutch network. These three companies were also technologically innovative, created competitive advantages, and were more successful.

International business activities of the Turkish-­‐Dutch companies All companies were involved in international business activities, but for the majority of the companies this was not more than 5 years. For two entrepreneurs their international business activities were limited to imports, but the rest had many international business activities such as, imports from EU countries, imports from Turkey, export and international trade to Turkey, exports to EU countries, manufacturing in Turkey and, exports outside the EU. Normally the internationalization of the companies went through different phases of internationalization, but two technologically innovative companies were born globals. For the successful international development of the companies all mentioned the importance of the right international reliable network. Most of the entrepreneurs prefer to do business within the EU, and especially with Germany. In Germany they do the most frequently business with the Turkish German business community and less with the German business community. The entrepreneurs consider the Netherlands as an attractive country and home base for internationalization of business inside the EU and outside the EU. International business activities of the Turkish-­‐Dutch companies in Turkey The Turkish-­‐Dutch companies that are involved in imports of products from Turkey are normally very pleased with their business and consider these activities as successful. Remarkable is that four companies that had entered the Turkish market for exports, joint ventures or by a takeover of a local company had suffered considerable losses on their business and some even regretted it, that they had started their business in Turkey. The explanations for their losses on the Turkish market are: the delayed or no payments at all of Turkish customers and partners, the unfamiliarity with the Turkish network, no agreements in a written contract, being unknown with the financial situation of the Turkish customer or business partner, and the obligations from the sales contract are not met by the Turkish business partner. Interesting is that the entrepreneurs that had acquired losses had all started their businesses in nineties and had had most of their education in Turkey. The ones that were successful in Turkey had technological innovative companies, a Dutch network and started their business after the millennium. These entrepreneurs considered their success factors: innovation, knowledge and experience with the culture, a very good international network (with international companies in Turkey), flexibility and adaptability. All entrepreneurs mentioned that Dutch companies, which had entered Turkey did not make these mistakes and were often more successful.

For a successful entrance on the Turkish market is essential to have: a good and reliable network, flexibility, an agreement on obligations of business partners, knowledge and experience, innovativeness, patience and good communication. The HOGIAF was mentioned several times for having a task with assisting the companies in giving them contacts for the development of a reliable network in Turkey.

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None of the TD entrepreneurs mentioned governmental institutions as a facilitating force for their internationalization or saw any role for these institutions for the future.

The role of the Turkish-­‐Dutch entrepreneurs in facilitating Turkish companies with entering the Dutch market for export or investment The Turkish companies that enter the Dutch market for export, import, international trade and investment are sometimes using the network of the Turkish-­‐Dutch business community, but also just as frequent Dutch networks. The explanation of this phenomenon is that on the one hand the Turkish Dutch community is focused to use their own Turkish-­‐Dutch networks and therefore limited in their variety of their business relations. On the other hand, there are some problems with the image of the Turkish-­‐Dutch community by the Turkish stakeholders in Turkey. This image has three appearances: in the first place that of “Almanje”, the rich Turkish German that has a lot of money (partly negative image), in the second place the image of workers that left Turkey and missed a lot (not a very positive image), and in the third place the new image of an interesting, developing business society that should be considered with respect for their business achievements in the EU. The image and positioning of the Turkish-­‐Dutch business community by the Dutch stakeholders According to the TD entrepreneurs the majority of the Dutch stakeholders have a perception of the Turkish-­‐Dutch companies as that of small companies, participating in some traditional industries, less professional and especially limited to the Turkish-­‐Dutch community. Some entrepreneurs in Rotterdam mentioned discrimination and unfair treatment in business by Dutch stakeholders. The three successful innovative companies are all in a growing market, are more professional, and have a Dutch network.

They did not talk about unfair treatment by Dutch stakeholders. The majority of the entrepreneurs mentioned that this traditional image is still partly true, but is changing now in time. They were all optimistic about the development of the Turkish-­‐Dutch image in the future. In time this image will change into that of larger, innovative companies with highly educated managing directors. It seems that innovation and more frequently being part of Dutch networks could be important for a quicker development of the Turkish-­‐Dutch business community. All mentioned that the HOGIAF could play an important role for the professionalization of the Turkish-­‐Dutch business community.

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Section IV: Survey Results Based on the 45 interviews in the survey proces, there is a subsample of 33 entrepreneurs (73%) out of the 45 who are active in international business. A large share of the entrepreneurs that are active abroad reside in the retail sector, live in one of the four largest cities of the Netherlands, mainly Rotterdam and are relatively highly educated. According to the definition, a majority of the entrepreneurs is “born global” and trades with Turkey as first destination outside the Netherlands.

Almost half of the internationally active trade with Belgium, Luxemburg or Germany. The subsample of entrepreneurs engaged in international business has strong networks in Turkey, as indicated by good social ties, business networks and formal business relations. Nearly half of this subgroup arrived in the Netherlands through a reunification program.

One can also be interested in how innovative Turkish-­‐Dutch entrepreneurs are. One good indicator for innovation is the number of new products or services the entrepreneur’s firm has launched over the past years. There is a subsample of 25 out of the 45 entrepreneurs (56%) that indicates to have initiated three or more innovations in the past three years. These highly innovative entrepreneurs are comparable to others with respect to most observable characteristics such as education and internationalization. Nonetheless, these innovators run significantly larger firms. They also are also significantly less likely to have come to the Netherlands through reunification programs.

Given the two descriptions of the subsamples of the international traders, there are good ways to test whether the traits are different from those who are not internationally active. In order to test what the defining characteristics are Pearson pair wise correlations tests are employed (alpha =0.2).

Internationalization There is a subsample of 15 entrepreneurs who obtain a large share of their sales abroad. By contrast, the data show that there are distinctive qualities related to those highly international entrepreneurs.

This group is concentrated in the retail sector in urban areas. They are better educated than average.

What is interesting is that these active traders are often born globals, and do not trade with Turkey first.

Most of them are active in Belgium, Luxemburg and Germany and have good networks in Turkey.

Tentative, this group starts international trade in Europe, through ethnic contacts, and diversifies to Turkey over time.

In our sample internationally active entrepreneurs do not appear to differ substantially in terms of education level, entrepreneurial traits and network participation from those active in the national market only. However, internationally active entrepreneurs are more concentrated in the retail sector and relatively less engaged in business services. These findings also hold for the entrepreneurs who are highly active in international business. What is noteworthy is that highly international entrepreneurs are less likely to start international trade with Turkey as their first destination abroad. In addition, highly active international entrepreneurs that do not trade with Turkey have significantly lower social network participation in the Netherlands and in Turkey.

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Exporting to Turkey Apart from the entrepreneurs active in international business there are entrepreneurs that trade with Turkey and those that do not. A subsample of 30 entrepreneurs (66%) has an active trade relationship with Turkey. Half of this subgroup is concentrated in the retail sector and has low presence in industry and business services. More than half of those that generate sales in Turkey are highly educated.

Interestingly, also more than half of these firms can be classified as born global, meaning that they internationalize in the first five years after inception. Nearly half of these firms start international trade in dealing with counterparts in Turkey. In addition, more than half of the entrepreneurs that are active in Turkey are also engaged in trade with Belgium, Luxemburg or Germany. These entrepreneurs have good networks in Turkey as indicated by very strong social ties. Especially entrepreneurs that have entered through unification programs and have started their firms in the 1990s deal with Turkey.

There is a subsample of 18 entrepreneurs that indicate to have started international trade by dealing with counterparts in Turkey. This subgroup is similar to those that trade with Turkey, expect that fewer of them are born globals. There is also a subgroup of 12 entrepreneurs that indicate to be highly active in Turkey. This latter groups is very often “born global” (67%) and nearly all entered the Netherlands through reunification programs (75%).

Again one would be interested if there are significant different characteristics of these three groups – those that trade with Turkey, those that are highly active in Turkey, those that trade there first – when compared to the other Turkish-­‐Dutch entrepreneurs. Based on the Pearson pair wise correlation tests there are no differences in terms of the acquired education levels. However, those that trade with Turkey are more concentrated in retail sector. They also are relatively more active in international trade in general, where for instance many that trade with Turkey also trade in Belgium, Luxemburg or Germany. In addition, entrepreneurs that trade with Turkey have good networks in Turkey, and these networks are much better in terms of social ties, business networks and formal business relationships.

Looking at the characteristics of those that internationalize by trading with Turkey as their first destination abroad, there is evidence that this group is less often born global, so they internationalize less quickly. Entrepreneurs in this group have much stronger networks in Turkey and more often entered the Netherlands through reunification programs. Of the 12 entrepreneurs that are highly active in Turkey, this subgroup again is concentrated in retail and are highly active in Belgium, Luxemburg and Germany. This group is more often born global, consists of entrepreneurs that entered through reunification programs, and can rely on relative strong social networks in Turkey. A key element that differentiates this group from the merely active in Turkey is that these entrepreneurs on average have much better formal business networks.

Importing from and outsourcing to Turkey In our data, a subsample of 20 entrepreneurs import from or outsource activities to Turkey.

Entrepreneurs in this group run significantly larger firms. A majority is active in retail and this difference is significant compared to other entrepreneurs. Only 10% is engaged in business services, which is significantly less than other entrepreneurs. Almost half of the entrepreneurs in this subsample have obtained a Bachelor or Masters, yet given the relatively highly educated total sample, the group of 22

importers and outsourcers are significantly lower educated than non-­‐importers. What stands out is that those engaged in importing from and outsourcing to Turkey are often born globals and as such also generate revenues from outside the Netherlands. Almost half of this group has its first trade contacts with Turkey. Interestingly, more than half of the outsourcing entrepreneurs also trades with Belgium, Luxemburg or Germany, which is significantly more than the other entrepreneurs. They also hold significantly stronger networks in Turkey than other entrepreneurs, where they indicate to have better social ties (70%), stronger business networks (85%) and especially stronger formal business relations (95%). A relatively low number in this group has entered the Netherlands through reunification programs.

Synthesis The full results of the survey can be found as a correlation matrix below. The main results of interest are highlighted in the figure 4.1 above. Here, we concentrate on the ‘stories’ about internationalization that we deducted from the theoretical lens, hence, this zooms in on personal attributes such as education, background, entrepreneurship and innovation. In the figure, significant pair wise correlations are taken up, and signified by stretching an arrow between the associated variables. Although the sample is not representative, there are a limited number of observations, and selection effects play an important role, what is the big picture that emerges from the data.

Personal characteristics Entrepreneurs that engage in international trade are not substantially different with respect to those that do not. A first observation is that higher levels of education and levels of innovation have no correlation with internationalization. The explanation in the data is that highly educated entrepreneurs are also successful in the Dutch market, especially in non-­‐traded business services, and have started their firms only recently. Even stronger, many successful internationalizers are older firms in the retail sector, have high levels of entrepreneurship but not necessarily on average a higher level of education.

Clearly, the selection effect plays a role, as we have an over representation of educated entrepreneurs in the sample, so that educated persons may self-­‐select into international trade. However, to some extend our test are more neutral, in that we have removed the selection effects by balancing the sample. The simple picture may be that international entrepreneurship is simply hard work, TD 23

entrepreneurs concentrate on finding markets for their competitively priced products and innovation and skills play a smaller role since coming from the Netherlands already puts TD entrepreneurs in a favorable position in Turkey.

With respect to personal background, the group that stands out is entrepreneurs that have come to the Netherlands through family reunification programs and have started their business in the 1990s.

Personal conversations with knowledgeable persons also confirm that specific dynamics have played a role. Often, these are people who have taken high risks by coming to the Netherlands at a higher age, not speaking the language and with low probability of entering the labor market. This group of entrepreneurs leveraged their entrepreneurial competences and networks to concentrate in setting up trade, especially with Turkey. Further, their psychic distance to the Turkish market is lower, since they have been raised there. Hence, their bonding with Turkish society is strong, and this they can leverage over time. By contrast, TD entrepreneurs of the same age who are born in the Netherlands have a comparative advantage in serving the Dutch market, since they speak the language and have low psychic distance to Dutch customers. However, if these entrepreneurs internationalize, they have more success in terms of larger and more innovative firms, and concentrate on other European markets first, instead of Turkey.

With respect to the theoretical lens, there is much support for the Uppsala model of internationalization in combination with networks, see below. Initial endowments, innovation, and education seem to matter less for internationalization, whereas psychic distance is important. Especially entrepreneurs that have remained close to their Turkish roots are successful in internationalization in dealing with Turkey.

However, for entrepreneurs that are born in the Netherland, psychic distance to other entrepreneurs of Turkish origin in Europe is important and these entrepreneurs have increasingly international commitments.

Trade Patterns Clearly, trade with Turkey is important for TD entrepreneurs. For the group of entrepreneurs that have entered the Netherlands through unification programs, relations with Turkey have been a stepping stone towards successful entrepreneurship. In addition, low cultural barriers with Turkey have enabled the born global effects in that entrepreneurs start international activities close to the starting date of the firm.

However, for many entrepreneurs trade with other EU countries is also very important. Even stronger, a substantial number of firms start trading with Turkey after they gave gained experience in other markets. The case study interviews with successful entrepreneurs reveal some mechanisms at work. In these interviews as well as in the survey, many TD entrepreneurs argue that psychic distance to the Turkish market is actually high, especially when compared to contact with other ethnic entrepreneurs in Europe.

In combination with the macro data, it is suggested that TD entrepreneurs are not typical traders in Turkish-­‐Dutch trade. Whereas exports from the Netherlands are in knowledge intensive sectors, the TD traders are small and entrepreneurial and concentrated in the wholesale and retail sector. TD 24

entrepreneurs who are closer to the typical Dutch external trade profile instead concentrate more on the EU market than on Turkey. Clearly, over time this may change, or policy be directed to increase the participation of innovative TD entrepreneurs in trade between Turkey and the Netherlands.

Networks In the literature, there is a strong emphasis on the effects of network formation for international entrepreneurship. The study has tried to distinguish between five network types and their importance for internationalization of TD entrepreneurs. We find little evidence that local embededness matters for internationalization. Local networks with other TD entrepreneurs and a network of Dutch entrepreneurs are not associated with higher levels of internationalization. The reason may be that these networks are more important for domestic activities, so that good local networks divert attention from international activity. Indirect evidence comes from the observation that entrepreneurs that entered the Netherlands later, and thus may be expected to have weaker local native and ethnic networks, are more active internationally and especially in trade with Turkey. The table below give the correlation matrix of the most important variables.

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Section V: Positioning of Turkish-­‐Dutch Entrepreneurs To investigate the question how TD entrepreneurs can contribute to strengthening trade relations between Turkey and the Netherlands, we have sent out a questionnaire to ten persons who have vast experience in trade between Turkey and the Netherlands, as entrepreneurs and public officials. We received seven questionnaires back. The questionnaire consisted of four broad questions relating to different positioning aspects of TD entrepreneurs, for which each question gave four alternative options.

The respondent was asked to do three things: to rate the alternatives from one to four, to add an alternative, and to indicate which alternative they thought the majority of the respondents would pick.

The last element is a frugal alternative to the Delphi method, if one assumes that ‘true’ experts are able to predict what others will say. This insight may then be used later to distinguish between alternatives.

The key is to paint a picture of the best course of action given the alternatives presented to the respondents.

The statements that emerged as the most important for the positioning of TD entrepreneurs are: 1.

2.

3.

4.

5.

Government: Focus on using TD entrepreneurs to attract investment from emerging markets, Government: Focus on institutional hurdles instead of market information, Government and HOGIAF: Use successful TD entrepreneurs as role models, HOGIAF: Organize more trade missions for Turkish firms to the Netherlands, HOGIAF: Focus more on building business networks than on institutional networks.

Clearly, the broad picture that arises is that the focus should shift from ‘inward out’ (how to reach the Turkish market) to outward in (how do Turkish firms reach the Netherlands), which will also benefit TD entrepreneurs. The experts argue that the TD entrepreneurs may gain more from Turkish firms coming to the Netherlands and building partnerships with TD entrepreneurs for the EU market, than TD entrepreneurs moving to Turkey.

Related to these expert opinions,these questions are also tackled in the telephone surveys. The 45 DT entrepreneurs expressed their opinion on the activities of the public agencies and interest groups like HOGIAF, EVD and FENEDEX. Overall, these activities receive an average score of 3.7 on a scale of importance ranging from 1 to 5. TD entrepreneurs with an international business give an average score of 3.9 to such activities, while entrepreneurs that are only active in the Netherlands give an average score of 3.2. In constrast, the activities themselves receive an average rating of 2.9. TD entrepreneurs with an international business give an average score of 3.3 to such activities, while entrepreneurs that are only active in the Netherlands give an average score of 2.2. There is a significant difference (p<0.05) between the group of traders and non-­‐trader with respect to their perception of effectiveness of public agencies and interest groups. In summary, there is a mutual understanding of the importance of the activities of public agencies and interest groups such as matchmaking (both at the Dutch and Turkish market, as well as in other markters abroad), changing the image of DT entrepreneurs (both at the Turkish government and Turkish businesses) , giving training and professionalization of the field.

However, there is a large gap in the ratings these activities between TD who are and are not internationally active, while both agree on the importance of several activities (like matchmaking and training).

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Section VI: Recommendations

The results of this study are based on four steps in the research process. In the first step, we have constructed a theoretical lens through which to assess internationalization of ethnic entrepreneurs. In the second phase, we have conducted ten exploratory case studies of successful entrepreneurs. In the third stage, we have conducted 45 surveys with a balanced but unrepresentative panel of Turkish-­‐Dutch entrepreneurs. As a concluding exercise, we have surveyed experts on the positioning of Turkish-­‐Dutch entrepreneurs in international trade.

In the process, the team has gained a rich insight into the issues confronting Turkish-­‐Dutch entrepreneurs that are active in international trade and in trade with Turkey. However, before we move to the recommendations for business practice and policy, we like to state some disclaimers. First is that our sample over the three empirical phases clearly is not statistically representative, nor have we aimed for that. Second, the outcomes of the research are to some extend colored by experiences and the knowledge build up by the researchers over the process. Although one should shield from such biases, it may have played at least some role when interpreting the results. Lastly, the data are self-­‐reporting and verification is often difficult. Certainly, comparable studies show that self-­‐reporting often does not impose strong biases, however, in some circumstance some systematical discrepancies between reporting and actual practice may occur.

With respect to the recommendations, we would like to stress that these only are partly related to the research conducted. Recommendations should be based on research, but they should also recognize the expert opinion that the researchers have gained though the process and thus go further. Below, we list our recommendation for three groups of readers. The first group is the Turkish-­‐Dutch entrepreneurs.

Here we zoom in on the lessons for business practice and the experiences of their peers. The second group is HOGIAF as the organization that has called for this research. A last group addressed is Dutch and Turkish officials that aim to improve trade relations between Turkey and the Netherlands.

Entrepreneurs 1. Turkey is a booming market, but do not focus only on selling in this market. Many experienced traders with Turkey note that it is more difficult than anticipated, due to larger than expected cultural distance, differences in business practices, lack of institutional clarity, and limited access to relevant business networks. Practice caution with low commitments first.

2. Entrepreneurship, experimentation, hard work, and leveraging contacts and access may be more important in building-­‐up trade relations with Turkey than innovative capacity or education levels. Many successful traders with Turkey have experimented with low commitments to Turkey, some have lost money, but many have learned from that. Low cultural distance to entrepreneurs in Turkey and ethnic Turks in Europe may be a competitive advantage for Turkish-­‐ Dutch entrepreneurs.

3. For Turkish-­‐Dutch entrepreneurs an interesting option is to interest Turkish trading partners to come to the Netherlands. This would suit especially the many Turkish-­‐Dutch entrepreneurs in

27

the retail and wholesale business. Make yourself more interesting for Turkish partners to build up and stress good networks of Dutch firms and customers.

4. Do not forget entrepreneurs of Turkish origin in other European countries and the Turkish diasporas at large. Many successful entrepreneurs of Turkish origin have tapped this competitive advantage. Cultural differences may be lowest with this group, since many of them are close in cultural distance as well as having 'European' business practices.

HOGIAF 1. Most Turkish-­‐Dutch entrepreneurs prefer to deal with your organization instead of with more traditional bodies like the EVD and the Chambers of Commerce. However, HOGIAF needs these institutional partners to improve the services to its members, increase knowledge, and improve business contacts. Thus, closer cooperation is warranted.

2. Increase contacts between members and Dutch innovative entrepreneurs to build networks for your members that can be leveraged in international trade.

3. Shift focus and try to interest Turkish firms for the Netherlands, working together more closely with partner organizations in Turkey. Also, use the successful Turkish-­‐Dutch entrepreneurs better to promote the Netherlands as an interesting trading partner.

4. Focus more on sister organizations in Europe, so as to build a network of ethnic entrepreneurs, both for members in the Netherlands as well as for firms in Turkey.

Public Institutions 1. Realize that trade with Turkey is not only difficult for Dutch entrepreneurs, but also for entrepreneurs of Turkish origin. They may have better insights in the market – so do not focus on that – but they lack insights in rules and regulations, possibly more than native Dutch entrepreneurs. Their networks are often in term of social relations, whereas business contacts may be very important for this group as well.

2. Use the group of Turkish-­‐Dutch entrepreneurs better and more actively in promoting the Netherlands in Turkey. Instead of seeing Turkey exclusively as an export market, consider also promoting the Dutch market and its firms to Turkish entrepreneurs.

3. For Turkish-­‐Dutch entrepreneurs it is still difficult to step outside their ethnic networks and approach the more traditional support mechanisms of the Dutch government. Recognize this by working more closely with Turkish-­‐Dutch organizations while at the same time strengthening connections between TD entrepreneurs and firms in sectors in which the Netherlands and Turkey have booming trade relations.

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References

Dunning, J. H. (1980). Towards an eclectic theory of international production: Some empirical tests.

Journal of International Business Studies, 11(1): 9–31.

Eisenhardt, K.M. (1989). Building Theories from Case Study Research. The Academy of Management Review 14 (4): 532-­‐550.

Johanson, J., and J.E. Vahlne (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1): 23–32.

Oviatt, B. M. and P.P. McDougall (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1): 45–64.

Roolvink, S. (2009). De bijdrage van het Turks-­‐Nederlandse ondernemerschap aan de Nederlandse economie, Kennispunt Recht, Economie, Bestuur en Organisatie, Universiteit Utrecht, ISBN: 978-­‐90-­‐ 5213-­‐182-­‐5 Sahin, M. , P. Nijkamp, and M. Rietdijk (2009). Cultural diversity and urban innovativeness: personal and business characteristics of urban migrant entrepreneurs. Innovation, 22(3): 251 — 281.

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