The role of institutional support in Asian entrepreneurial expansion in Britain Anuradha Basu Department of Economics, The University of Reading, Whiteknights, Reading RG6 6AA Tel: 0118 987 5123; Fax: 0118 975 0236; E-mail: a.basu@reading.ac.uk Received: 31st July, 1998; Revised: 1st October, 1998; Accepted: 6th October, 1998 ABSTRACT This paper examines the role of formal and infor- mal institutional support in the expansion of Asian-owned businesses in Britain, based on a large survey of Asian entrepreneurs based in Brit- ain. More speci®cally, it investigates the signi®- cance of formal bank) sources of ®nance relative to that of informal family or personal) sources of ®nance at start-up and the implications of that reli- ance on subsequent business expansion. The paper also examines the wider role of informal family and community networks in providing access to information and labour, in addition to capital, and the impact of these support networks on business expansion. The methodology used is that of quanti- tative, statistical analysis supplemented by qualita- tive survey data. The evidence suggests that both formal and informal institutional support have played a limited role in fostering Asian entrepreneurial expansion in Britain. Although bank ®nance was valuable in preventing undercapitalised ventures, rapidly grow- ing Asian businesses did not rely on bank ®nance either at start-up or for expansion. This may be attributed to the short-term perspective of banks. Rapidly growing Asian businesses did not rely on formal sources of advice. Nor did they rely on family or community networks for ®nance or labour. The Asian entrepreneurs who rapidly expanded their businesses invested their personal savings at start-up, relied on their family and friends for advice, employed non-Asian labour and invested in employee training. These results imply that Asian entrepreneurs aspiring to grow need to advance beyond the traditional reliance on informal support networks for ®nance and labour. Formal institutions could oer long-term debt or equity ®nance, encourage investment in employee train- ing, and provide appropriate training schemes. MANAGERIAL AND POLICY IMPLICATIONS . Asian entrepreneurs aspiring to grow need to consider adopting a new managerial style, moving away from the traditional reliance on family and community resources. . Greater awareness and understanding among Asian entrepreneurs needs to be created about services oered by governmental and quasi- governmental support agencies. . British banks need to adopt a longer-term per- spective to stimulate Asian business growth. . Intermediary agencies might wish to tailor training programmes to meet the needs of Asian businesses. . Banks and other support institutions need to understand how Asians and other ethnic mino- rities run their businesses and to be more sensi- tive to their requirements. KEY WORDS Asian entrepreneurship, business expansion, insti- tutional support, bank ®nance, informal networks INTRODUCTION This paper aims to analyse the role of institutions in contributing to the growth of Asian entrepre- neurship in Britain. By `institutions' is meant not just `the rules of the game in a society or . . . the humanly devised constraints that shape human interaction' North 1990) but also the intermedi- aries and networks that facilitate the transfer of ®nance, information and other resources necessary Journal of Small Business and Enterprise Development, Volume 5, Number 4 # 1999 Henry Stewart Publications, ISSN 1462-6004, 317±326