Global Business and Economics Review, Vol. 12, Nos. 1/2, 2010 3 Amish enterprise: the collective power of ethnic entrepreneurship Donald B. Kraybill* The Young Center, Elizabethtown College, One Alpha Drive, Elizabethtown, PA 17022, USA Fax: 717-361-1443 E-mail: [email protected] *Corresponding author Steven M. Nolt Goshen College, 1700 South Main Street, Goshen, IN 46526, USA Fax: 574-535-7457 E-mail: [email protected] Erik J. Wesner The Young Center, Elizabethtown College, One Alpha Drive, Elizabethtown, PA 17022, USA Fax: 717-361-1443 E-mail: [email protected] Abstract: This paper examines how Amish communities build and sustain enterprises that produce and/or sell goods to both ethnic and non-ethnic markets. Based on qualitative research including interviews with 161 Amish entrepreneurs in 23 communities in the USA, the authors develop a transformative model of ethnic community entrepreneurship. The analytical model conceptualises the dynamic interaction between three forces/agents – cultural constraints, cultural resources, entrepreneurs – and shows how they shape the character of small businesses, which, in turn, transform the ethnic community that conceived them. The results demonstrate how culture, community, and ethnic context mediate the nature, size, and function of ethnic enterprises. Keywords: Amish; Amish businesses; Amish enterprises; ethnicity; ethnic businesses; community; collective entrepreneurship; USA; religion; culture; community resources; social capital; small businesses; economics; ethnic entrepreneurship; global business. Reference to this paper should be made as follows: Kraybill, D.B., Nolt, S.M. and Wesner, E.J. (2010) ‘Amish enterprise: the collective power of ethnic entrepreneurship’, Global Business and Economics Review, Vol. 12, Nos. 1/2, pp.3–20. Copyright © 2010 Inderscience Enterprises Ltd. 4 D.B. Kraybill et al. Biographical notes: Donald B. Kraybill is Distinguished College Professor and Senior Fellow at The Young Center for Anabaptist and Pietist Studies at Elizabethtown College in Pennsylvania. He is the author of The Riddle of Amish Culture and other books on the Amish of North America. Steven M. Nolt is Professor of History at Goshen College in Indiana and author of A History of the Amish and co-author of Amish Enterprise: From Plows to Profits. Erik Wesner is a Visiting Fellow at The Young Center for Anabaptist and Pietist Studies at Elizabethtown College in Pennsylvania and author of Success Made Simple: An Inside Look at Why Amish Businesses Thrive as well as the blog ‘Amish America’. 1 Introduction Entrepreneurial research often focuses on the personal traits, values, and creative abilities of individual entrepreneurs. However, a growing body of research points to the significant role that community plays in empowering enterprise development by highlighting how different social and ethnic contexts facilitate the rise of businesses. Recent studies (Altinay, 2008; Basu and Altinay, 2002; Light and Gold, 2000; Morris, 2000; Pessar, 1995) have shown the significant ways in which ethnic communities forge distinctive enterprises. For two decades, the research on social capital has demonstrated how social networks and common values lubricate the social relationships that undergird successful enterprises by reducing their operating costs (Aldrich and Zimmer, 1986; Anderson and Jack, 2002; Flora, 1998; Lyons, 2002; Miller et al., 2007). Recent work by Candland (2000) and Dana (2009), as well as that of Dodd and Gotsis (2007), show the complex ways that religion impacts entrepreneurial activity. Religion, however, always has a specific social base and particular cultural expressions, and these must be parsed in their unique context in order to explain exactly how they support enterprise building (if they do). Altinay (2008) measures Islamic commitments, e.g., by distinguishing between practicing and non-practicing Turkish immigrant entrepreneurs in London. When the forces of ethnicity and religion combine, as they do in Amish society, they intensify the effects of dense social networks, trust, reciprocal expectations, shared values, and a common religio-cultural outlook in ways that magnify and increase the enterprise-building capacity – the social capital of a group. As such, Amish communities offer a rich setting for sociological excavations of the connections between community forces and enterprise formation. This project explores a basic question: How do religious values and ethnic infrastructure thwart and/or mobilise entrepreneurship in the Amish communities of North America? In other words, how does a particular ethnic context mediate enterprise development and sustain it over time? Our transformative model of ethnic community entrepreneurship conceptualises the dynamic interaction between three forces – ethnic constraints, ethnic resources, enterprise owners – and shows how they shape the character of businesses which, in turn, transform the community that spawned them. Amish enterprise: the collective power of ethnic entrepreneurship 5 The Amish are a distinctive ethnic community whose subgroups share a common religion, history, German-Swiss cultural background, German-derived dialect, and folk practices (using horse-drawn transportation, wearing distinctive clothing, and selectively adopting technology). It is impossible to separate religion from ethnicity in Amish society, a fact underscored by their use of one dialect word, Gmay, to refer to both church and community. Religious beliefs and values have crafted long-standing norms, practices, and church regulations known as Ordnung that created a distinct Amish identity. In this community, religion is not a specialised activity, but a pervasive influence that penetrates all sectors of life, including business. By definition, all members are practicing their religion – they must wear distinctive clothing and attend church services regularly or forfeit their membership and acceptance in the community. The Amish do not espouse communal ownership of property. Some enterprises are organised as small partnerships, but more frequently they are owned by sole proprietors. In a few cases, Amish producers have formed cooperatives to market products (cheese and organic produce) in order to gain marketing efficiencies and to hire non-Amish managers who have greater access to technology such as vehicles, electricity, and computers. The Amish accept capitalist values, but these are mediated somewhat, as we will demonstrate, by the norms and regulations of their ethnic community. Enterprise research employs ‘ethnic community’ and ‘community’ in various ways. Peredo and Chrisman (2006) develop a theory of ‘community-based enterprise’, in which a civic community acts corporately as both entrepreneur and enterprise. The term ‘community entrepreneurship’ is used by Selsky and Smith (1994) to conceptualise entrepreneurs of non-profit organisations in communities. Dana and Dana (2007) and Franz (2009) describe cooperatives as a collective and communal form of entrepreneurship among the Old Colony Mennonites in Paraguay. The 450 Hutterite colonies in North America eschew private property and, in their communal context, the entire colony (approximately 100 people) owns and operates non-farm enterprises (Janzen and Stanton, 2010). ‘Ethnic community’, in our model, refers to the values, norms, rituals, social networks, and customary practices of a particular ethnic group – the Amish, in this case – whose members own and operate individual enterprises. 2 Methods Our research identified approximately 9,000 Amish-owned enterprises in North America.1 For our purposes, an enterprise is a business that produces and sells goods and/or services, or buys and resells products, with or without adding value, and has annual sales of US $10,000 or above. None are traditional farms, but some are agriculture-related operations that breed pets or raise produce, but require little land. Most of the enterprises are manufacturing or retail operations ranging from ones that provide self-employment for the owner to establishments that employ as many as 30 people. We define owners as those who own and manage an enterprise, irrespective of whether or not they founded the business. Previous research on Amish businesses focused on a single settlement (Kraybill and Nolt, 2004; Dana, 2007) or a single entrepreneur (Hawley, 1995). This project expands our knowledge of entrepreneurship by describing Amish enterprises in many states and settlements. Our qualitative, ethnographic methods involved participant observation, 6 D.B. Kraybill et al. face-to-face interviews, and document analysis, which permitted triangulation of the different sources. Face-to-face interviews were conducted with 161 Amish business owners in 23 settlements in eight states over a ten-year period (1999–2008).2 The interviewees were selected from Amish community directories and through referrals to create a purposive stratified sample. A purposive sample (sometimes called a judgement or strategic sample) involves selecting sample units based on the investigator’s judgement, in order to obtain a sample that is representative of the population under study (Frankfort-Nachmias and Nachmias, 1996; Babbie, 2004; Mason, 2002).3 Our sample of owners was intentionally stratified to assure that key components of Amish industry – settlement, affiliation, gender of owner, size of enterprise, age of enterprise, type of product, wholesale/retail, and type of market – were represented in our study. Fewer than 2% of the selected owners refused an interview.4 Notes from interviews were transcribed for analysis. Amish business publications were analysed to learn more about the socio-cultural context, and the investigators participated in community events to better grasp the context that supports the formation of Amish enterprises.5 Our interviews and field observations in 23 communities in eight states and analysis of Amish publications covering many settlements, in our judgement, represent the diversity of business activity in all Amish communities. Our ethnographic methods do not generate quantitative, survey-based descriptions of Amish business; rather, they provide qualitative interpretations of the role and significance of enterprise-building in Amish society. Although, not a randomised probability study, our purposive, stratified sample of owners represents the diversity of Amish enterprises and permits tentative generalisations about them. 3 Amish social organisation The Amish trace their roots to the Anabaptist movement that emerged in Switzerland during the 16th-century Protestant Reformation. A small Christian group, the Amish formed their own church within Anabaptist circles after 1693 in Switzerland, South Germany, and the Alsace region of present-day France. The Amish (now extinct in Europe) arrived on US soil in several waves of immigration between 1736 and 1860 (Nolt, 2003). Although Amish businesses share some traits with immigrant enterprises, they did not, like many immigrant businesses, arise because of discrimination or a blocked opportunity structure in the larger society (Light and Gold, 2000). When Amish businesses emerged in the last quarter of the 20th century, Amish people already had a reputation as an enterprising agricultural community. Amish communities are located in 27 US states and in the Canadian province of Ontario. The communities are organised into 1,725 church districts, which are composed of 25 to 35 households. Districts with numerous landowning farmers have a radius of 4 to 8 km while those with many micro-enterprise owners – which require smaller plots of land – may have a radius of only 2 km. All districts are in rural areas and a few are adjacent to small towns. Families in a particular district often live within walking proximity of co-ethnics, but they also live adjacent to non-Amish neighbours. The church district is the religious, social, and political unit of all Amish life and the base of ecclesiastical authority. Church members are required to worship in the district where they reside and comply with their district’s Ordnung. An entrepreneur who violates church regulations – e.g., by selling goods on Sunday or by purchasing a motor Amish enterprise: the collective power of ethnic entrepreneurship 7 vehicle – will receive a disciplinary visit from church leaders. This direct connection between an owner and his/her local district illustrates how deeply enterprises are embedded in Amish society. The 1,725 districts are scattered across 425 geographic settlements – locales that have anywhere from one to as many as 100 districts. The number of enterprises is influenced by the settlement’s demographic and economic context. Agriculture dominates some settlements. Many have a mix of enterprises and farms, some have a strong entrepreneurial culture with many enterprises and, in a few settlements, most Amish people work in factories owned by non-Amish.6 In addition to districts and settlements, the extended family and subgroup affiliations shape entrepreneurial development. A typical 35-year-old Amish person (assuming seven children per family) is embedded in a network of 250 family members – siblings, aunts, uncles, in-laws, and first cousins. The extended family offers a pool of ethnic resources (capital, wisdom, labour, markets) for enterprise development. Districts with similar cultural practices are loosely linked together in about 40 different affiliations, making it risky to generalise about ‘the Amish’ as one homogeneous group. Affiliations vary in their degree of traditionalism and openness to change, which influences their type and amount of entrepreneurial activity. With an average of 135 adults and children per district, the estimated Amish population in North America is about 233,000.7 The population doubles every 18 years, mostly through biological reproduction and a robust retention rate averaging 85% or higher. 4 The rise of Amish industry The Amish, for the most part, were bystanders to two events that transformed US society: the Industrial Revolution in the 19th century and the mass mechanisation of farming in the 20th century. Throughout much of the 20th century, the vast majority of Amish households earned their livelihood from small family farms operated by horse power. The handful of Amish enterprises that existed before 1975 were mostly one- or two-person operations (blacksmiths, carpenters, carriage makers, seamstresses) serving the needs of their rural separatist society. The occupational landscape of Amish society shifted rapidly after 1975 and, by 2009, over half of the households received their primary income from non-farm sources.8 The bulk of non-farm employment is in Amish-owned enterprises that typically have fewer than a dozen employees, most of whom are Amish. Although sales volumes range widely, larger firms often have annual revenues above US $5 million. Depending on the affiliation and settlement, the number of businesses per church district ranges from three to 15. The failure rate of Amish businesses is less than 10% in the first five years, whereas the overall failure rate of small businesses in the USA in the same time period is about 50%.9 Many Amish abandoned their ploughs in the last three decades because their horse-powered farms were unable to compete with highly mechanised operations. Many prospective farmers could not accumulate the funds for the land, cattle, and equipment necessary to establish a successful operation (Kraybill, 2001). Micro-enterprises required a much smaller start-up investment than farming, offered work for children and extended 8 D.B. Kraybill et al. family, and tethered work close to home. In a typical start-up scenario, some family members began a new enterprise on or near their farm, while others continued farming. A sample of Amish-owned industries appears in Table 1. There are two broad types: micro-enterprises and small businesses. Micro-enterprises, for our purposes, are small operations with a self-employed owner and fewer than five employees, some of whom are often kin. Examples include small engine repair and sales, greenhouses, cabinet shops, quilt shops, carriage or bicycle shops, auction companies, and small retail stores. About one-fifth of Amish enterprises provide self-employment for the owner and have no fulltime employees apart from unpaid family workers.10 Table 1 Examples of Amish Enterprises Auctioneering Cabinet making Carriage making Construction (commercial and residential) Construction trades (carpentry; roofing; masonry) Equipment manufacturing Food processing Furniture making (indoor and outdoor furniture) Greenhouses Landscaping Markets (fruits and vegetables; baked goods; deli products) Painting Pet breeding/growing Plumbing Produce growing Quilt and craft making Retail stores (hardware; groceries; clothing) Saw mills Solar energy supplies and installation Storage shed manufacture and/or sales Welding Small businesses employ five or more people, require more investment capital, generate larger sales volumes, and have a complexity that requires greater management skills. They may be located near an owner’s residence or several km away to gain access to better roads for transporting raw materials and finished products. Furniture making and farm equipment manufacturing are prominent small businesses. Other owners operate large retail stores that resell products (food, clothing, hardware, equipment, tools) purchased wholesale from Amish and non-Amish suppliers. Construction-related trades are another prominent type of small business. These often specialise in residential or commercial building and include trades such as roofing, plumbing, and painting. Approximately one-third of the enterprises target the ethnic market, selling products such as clothing, carriages, and gas appliances to Amish customers. Another third focus entirely on non-Amish customers and the remainder serve both ethnic and non-ethnic Amish enterprise: the collective power of ethnic entrepreneurship 9 clientele. A mixed-market business, such as a greenhouse, sells products to customers both inside and outside the Amish community. Tourism provides an important market for Amish products in states with sizable Amish-themed tourist industries. In prominent tourist areas, Amish enterprises produce quilts, textiles, furniture, and handicrafts for retail or wholesale tourist markets. Amish enterprises vary in their embeddedness in the ethnic community. Highly embedded shops (manufacturing operations or retail stores) are more segregated from the larger economy in location, products, ethnic labour, ethos, and market. An Amish carriage maker with co-ethnic employees working in a shop adjacent to his residence exemplifies a highly segregated enterprise. By contrast, an Amish-owned construction business that builds non-Amish commercial facilities, employs some non-Amish people as workers and vehicle drivers, and uses public electricity at building sites, is more loosely embedded in Amish culture. 5 A transformative model of ethnic community entrepreneurship Our model of ethnic entrepreneurship describes the transformative interactions between three agents – ethnic constraints, ethnic resources, enterprise owners – that shape the character of enterprises as well as their power to transform the values and practices in the ethnic community that spawned them. Figure 1 A transformative model of ethnic community entrepreneurship 10 D.B. Kraybill et al. Amish enterprises are negotiated outcomes that emerge from the dynamic interaction at the intersection of cultural restrictions, collective resources, and entrepreneurial creativity. Certain values and norms retard enterprise development. At the same time, the ethnic community offers a reservoir of cultural resources to empower enterprise development. The countervailing forces of restraints and resources, however, cannot alone explain the rise of Amish businesses. The agency of individual owners to harness resources and overcome constraints is vital to build and sustain productive enterprises. Entrepreneurial skills and vision transform the crisscrossing currents into enterprises with a distinctive Amish character. Moreover, the creation of Amish businesses has a transformative, reflexive influence on Amish society at large – introducing an incipient class system, welcoming new technology, modifying gender relations, increasing interaction with the outside world, and eroding some long-held religious and cultural values. This model attends not only to the contributions of individual entrepreneurs, but especially to the collective power of an ethnic community to both resist and facilitate enterprise formation. 6 Cultural constraints on enterprise development Amish entrepreneurs face numerous cultural obstacles when starting or expanding an enterprise. In addition to the normal challenges of beginning a new business, they must scale cultural hurdles imposed by their own society. 6.1 Religious values Two cardinal values, humility and separation from the world, grounded in religious teaching, obstruct the freedom of entrepreneurs. Although the Amish are not economic communitarians, their religious beliefs promote communal values such as self-denial, humility, and the priority of church-community norms over individual choice. Indeed, individualism drives the deepest wedge between the core values of Amish life and mainstream US culture. Whereas US culture trumpets individual freedom, choice, and independence, Amish society sings the virtues of obedience and submission to the church community. Religious leaders stress the importance of humility and note that the Bible condemns pride.11 Humility and deference, not assertive independence, are esteemed in Amish life. Entrepreneurs who point to their achievements are scorned as arrogant and out of line with Amish principles. Another impediment to entrepreneurial activity is the centuries-old teaching on separation from the world. Religious ancestors of the Amish died as martyrs for their religious convictions in the 16th century, an experience that galvanised the Amish view of the church as a minority culture.12 The church is seen as a counterculture, standing apart from the worldly values and practices that celebrate individualism, consumerism, fads, sports, and entertainment. Amish leaders fear that, without clear boundaries between church and society, the forces of modernisation will erode separatist practices such as distinctive clothing, endogamy, horse-and-buggy transportation, and the taboo on television and the internet. By their very nature, most businesses require acquisition of outside raw materials, interaction with non-Amish suppliers, wholesalers, and customers, effectively negating Amish enterprise: the collective power of ethnic entrepreneurship 11 the principle of separation from the world. Olshan (1994) observes that the “Come in, we’re open” signs on Amish retail stores are a graphic rejection of separatist beliefs. 6.2 Religious practices Other obstacles also clutter the road to entrepreneurship in Amish society. Religious teachings forbid members from developing businesses that produce or sell certain products or that require air travel. Industries related to alcohol, entertainment, electronic communications, gambling, and the arts are all off-limits. Church regulations forbid selling and transacting business on Sundays. The church also prohibits litigation for personal or business purposes. Litigation, in Amish eyes, is a form of coercion that violates Jesus’ rejection of force in social relations. It is permissible to hire lawyers to prepare business contracts, handle real estate transactions, and represent business owners trying to collect unpaid debts, but cultural taboo forbids lawsuits. Marketing and advertising are also crimped by cultural constraints. Television and radio ads are off-limits, as are promotions that feature photographs of the owner. Most of the more conservative Amish affiliations frown on associating personal names with businesses. The use of acceptable advertising varies by sect. Conservative groups restrict advertising to homemade signs near enterprise entrances, whereas change-minded communities permit promotional brochures, product catalogues, and full-colour ads in trade magazines. A church-imposed limitation on enterprise size is another significant cultural restraint. Because church leaders fear that well-to-do business owners will disrupt the egalitarian balance of power and wealth in Amish society, they strongly frown on ‘large’ businesses. In conservative groups, five or six employees are the informal cap, while in change-minded affiliations more than 30 employees is considered too large. Regardless of workforce size, the community has a deeply embedded cultural bias against large-scale operations. Amish lore includes stories of business people who ‘got too large’ and were forced to sell by church leaders. Entrepreneurs who refuse to downsize or sell a large business may be excommunicated – the ultimate and final ethnic constraint! 6.3 Education Formal education ends after eight grades of elementary school. The majority of students attend one of the 1,800 one- or two-room Amish-operated schools. Self-trained Amish teachers, with only an eighth grade diploma, teach a basic curriculum that includes writing and arithmetic. English is used in the classroom rather than the German dialect. Schools do not use electric power, do not teach science, and are not equipped with laboratories or electronic media. Amish entrepreneurs enter the world of business without a high school diploma, let alone college-level business courses, technical training, or a scientific worldview. 6.4 Technology Church regulations restrict certain types of technology in business. They prohibit owning and operating motor vehicles, tapping electricity from the public power grid, freely using telephones, and owning computers. Faced with these obstacles, Amish ‘engineers’ have 12 D.B. Kraybill et al. improvised alternatives that respect ethnic guidelines and simultaneously enhance enterprise productivity. Typically, electric motors are stripped from factory-made machinery and replaced with hydraulic or pneumatic motors. Diesel engines operate pumps that circulate pressurised oil and air to refurbished motors on table saws, jointers, drill presses, metal cutters, and many other machines. The church restricts the use of 110-volt electricity, but most Amish groups permit the use of 12-volt current from batteries. Thus, battery-powered tools are commonplace. The ban on owning motor vehicles and computers is addressed by outsourcing. Most, but not all, Amish groups permit business owners to hire private ‘taxis’, vehicles owned and operated by non-Amish, to transport raw materials and products, as well as employees, to and from work sites. Similarly, some larger businesses hire non-Amish vendors to provide computer services for inventory, payroll, and other functions, and some contract with website designers and operators to develop and maintain websites for their businesses, although the sites are not owned by the Amish. The taboo on the internet, however, remains a challenge because many non-Amish suppliers have their catalogues online and only accept online orders. The Amish forbid the installation of telephones inside homes, a taboo that had previously applied to businesses. The most traditional sects still do not permit telephones on Amish property but, in recent years, the most change-oriented groups began permitting owners to install landline telephones in their offices and contractors to use cell phones to coordinate their construction crews. The most widespread practice involves installing a phone in a shanty outside a business, allowing the owner to receive and send messages and speak at an appointed hour. Although Amish businesses have found ways to circumvent some ethnic taboos, the detours do impede their efficiency and access to the outside world. All violations of the cultural restrictions are serious, and if they do not amend their behaviour, deviants may face excommunication. Typically, however, church leaders seek compromises to avoid excommunicating entrepreneurs who violate the rules. 7 Cultural resources for entrepreneurship Despite the ethnic obstacles to operating a competitive enterprise, entrepreneurs do benefit from many resources in their community. Some of these assets are rooted in religio-cultural values; others come through ethnic infrastructures that bolster entrepreneurship. These resources counterbalance the restraints that hinder enterprise development. 7.1 Ethnic values Four cultural dispositions energise enterprise development – an entrepreneurial heritage, a vigorous work ethic, integrity, and frugality. Although, it may seem surprising that homespun farmers could, within one generation, develop thriving businesses, some of the skills needed to operate a farm transfer readily to running a business. Farmers need to cope with contingencies such as weather, fluctuation of prices, and machinery breakdown, and they need to juggle many different tasks – growing crops, managing herds, and maintaining facilities, to name a few. These skills, honed by their agricultural