Open to Business? An Exploration of the Impact of the Built Environment and Zoning Plans on Local Businesses in Pre-war and Post-war Residential Neighbourhoods in Dutch Cities

Abstract

Urban residential neighbourhoods, including migrant neighbourhoods, have become important incubation zones for small businesses in recent years and policy-makers and academics alike are wondering which local factors affect this development. This paper analyses the extent to which migrant neighbourhood characteristics related to the built environment and the local regulations matter in determining the possibilities for small businesses. It contrasts two types of neighbourhood in the Netherlands—pre-war neighbourhoods with little functional separation between residential and commercial purposes, and post-war predominantly mono-functional residential neighbourhoods. Quantitative and qualitative methodologies are combined using available firm data from trade registers of the Dutch chambers of commerce, reviewing neighbourhood zoning regulations and conducting focus group and individual interviews with neighbourhood experts and entrepreneurs. It is found that the built and regulatory environment of migrant neighbourhoods does indeed appear to impact significantly on the chances of setting up a business and its subsequent fate.

1. Neighbourhoods and Opportunities for Migrant Businesses

In the equilibrium model world of (neo-classical) economists, it seems so easy. If there are opportunities for businesses, they will be perceived and seized by fully informed, rational actors. Real human beings, however, who have only partial knowledge and may be driven by motives other than sheer costs and benefits do not always perceive opportunities and, even if they do, may not seize them. The opportunities themselves may be blocked because of rules and regulations pertaining to educational qualifications needed to start in a particular line of business and because of difficulties in obtaining the necessary start-up capital, lack of social capital which would provide linkages to suppliers, customers or workers. Entrepreneurship turns out to be anything but a self-evident response to opportunities and a host of variables on both the supply and the demand sides impact on this (Light and Rosenstein, 1995; Phizacklea and Ram, 1995; Lofstrom, 2002; Kloosterman, 2010).

In this paper, we want to look at the hitherto rather neglected issue of the role of neighbourhood characteristics in determining the presence and survival rates of small businesses. Even if, on the one hand, aspiring entrepreneurs with suitable skills are there and, on the other, a sufficient demand is also present (for instance, due to a critical mass of co-ethnics in the neighbourhood), business start-ups may still be thwarted by the lack of appropriate business spaces. In our view, then, the availability of suitable business spaces should be seen as an intervening variable between the supply side (the entrepreneurs and the resources that they bring with them) and the demand side or opportunity structure.

The importance of the availability of suitable business spaces holds, in principle, for all aspiring entrepreneurs. This bottleneck, however, may be more salient for aspiring migrant entrepreneurs from non-Western backgrounds as they are typically lacking in financial means. Given the predominant consumer orientation of many migrant businesses—such as small retail, and restaurants and cafes—they are dependent on cheap and accessible business spaces located in or near residential areas. Neither business spaces nor migrants are equally distributed across cities. In this paper, we will empirically test the extent to which neighbourhood characteristics related to the built environment and the prevailing local regulations matter in determining the possibilities for small businesses. We hypothesise that these particular characteristics of neighbourhoods intervene in the matching processes between (aspiring) entrepreneurs and business opportunities (Ram and Jones 1998; Kloosterman and van der Leun, 1999; Burgess, 1968; Fong et al., 2005). We expect that the physical spatial neighbourhood structures in combination with the local regulatory frameworks at least partly determine the availability of business spaces suitable for nascent (migrant) entrepreneurs who tend to lack financial resources.

To test this proposition, we compare two types of neighbourhood in the Netherlands which may serve as contrast cases. On the one hand, we focus on older, pre-World-War-II neighbourhoods with relatively little functional separation between residential and commercial purposes (also called mixed neighbourhoods) and, on the other, on predominantly mono-functional, residential neighbourhoods built after World War II. We assume that mixed neighbourhoods offer more promising business prospects for businesses operating in the retail, small wholesale, restaurants and catering industries combining good access locations with relatively cheap commercial prices (Jacobs, 1961).

The following research questions will be addressed

What are the differences in terms of built environment and regulations between pre- and post-war migrant neighbourhoods?

Do pre-war neighbourhoods provide better conditions for local businesses than post-war neighbourhoods due to differences regarding spatial environment and regulations?

We start with a brief discussion of the relevant literature (section 2). We then (section 3) present the research methodology providing information on the neighbourhood selection procedure, the quantitative part, as well as on the collection and use of qualitative data. After that, we provide a succinct overview of the morphologies and the prevailing zoning regulations of the selected pre- and post-war migrant neighbourhoods (section 4). This gives us the foundation to explore differences in business success of local firms in pre- and post-war migrant neighbourhoods and assesses research question 2 (section 5). Finally, we highlight our main findings and dwell briefly on their implications (section 6).

2. Built Environment and Zoning: A Neglected Issue

Many studies in the field of migrant entrepreneurship have focused on the ‘supply-side’ factors explaining entrepreneurship by means of individual and ethnic group characteristics as well as social embeddedness of entrepreneurs (Light and Bonacich, 1988; Portes and Sensenbrenner, 1993). More recent studies added the demand-side perspective investigating how prevalent market conditions create opportunity structures and how migrant entrepreneurs have been able to exploit these opportunities (Waldinger et al., 1990; Kloosterman et al., 1999; Kloosterman, 2010). So far, studies have often remained aspatial in the sense that migrant entrepreneurs are more or less ‘superimposed’ on (urban) space, whereas concrete opportunities for small businesses occur in concrete areas and neighbourhoods (Ram et al., 2002). Rekers and van Kempen (2000) identified key dimensions along which urban neighbourhoods may differ regarding opportunities for migrant entrepreneurs. First, the demographic characteristics of neighbourhoods partly shape both the potential supply of migrant entrepreneurs as well as the demand for their products. Secondly, in a more indirect way, neighbourhoods may influence businesses through the make-up of their built environment. Thirdly, differences in local policies, rules, business regulations, support regimes and, very importantly, zoning regulations, may affect migrant entrepreneurs at a neighbourhood level (Ram et al., 2002). Here, we will focus on the built environment and the zoning regulations as we see these two as crucial intervening variables in the matching process between entrepreneurs and opportunities.

Residential neighbourhoods, including migrant neighbourhoods, have become important incubation zones for small businesses (Weterings et al., 2008; Schutjens et al., 2007). This is primarily the result of the steady increase in the number of self-employed without employees, who have chosen to start and operate their firms from the entrepreneurs’ homes (Schutjens and Stam, 2003; Stam, 2009). Increased outsourcing of business activities by large firms, the economic shift towards business services and ICT, the rise of Internet commerce and growing flexibility of labour contracts have made small businesses a more viable model (Wennekers et al., 2008; Sleutjes, 2012). The importance of neighbourhoods as incubation zones especially holds for migrant entrepreneurs who are usually dependent on cheap business spaces in, or near, their own neighbourhoods. As migrants are clustered in particular neighbourhoods, the characteristics of the built environment and the zoning regulations of ‘migrant neighbourhoods’ are thus worthwhile investigating.

The migrant neighbourhood constitutes the local production environment in terms of firm-external factors impacting on business functioning (Buit, 1965; Lambooy, 1997). While acknowledging that local business dynamics depend greatly on firm-specific characteristics (Garnsey, 1998; Bridge et al., 2003; Tamasy, 2006) and on urban and regional characteristics (Porter, 1998; Stuart and Sorenson, 2003; Audretsch and Dohse, 2007), the neighbourhood as the local production environment does affect local business dynamics as was shown in a recent study by the Netherlands Environmental Assessment Agency or PBL (2010).

This study outlined a number of location factors that affect business functioning at the neighbourhood level in theory and empirically tested the effects of a number of related characteristics. It identified the following relevant local dimensions: accessibility and parking (Hagens et al., 2009), local market prosperity—especially important for consumer services businesses catering largely to local needs (Bulterman et al., 2007; Ouwehand and van Meijeren, 2006), local liveability (Wilson, 1987), the presence of certain local amenities and other economic activities (McCann and Folta, 2008; Weterings et al., 2009), and the availability, quality, size and representativeness of local business spaces (Aalders et al., 2008).

Dantuma (2008) concluded that the lack of cheap commercial floor space is one of the main bottlenecks for growth of small and medium enterprises (SMEs) in the Netherlands. He put forward useful suggestions to tackle these problems, such as the promotion of functional mixing of residential and commercial building spaces in residential neighbourhoods as well as more business-friendly local zoning regulations. The present regulatory local regimes are, according to this study, often too restrictive regarding the use of space for commercial purposes and, in addition, typically involve lengthy procedures. Moreover, municipalities can use local spatial regulations to ban less desired commercial activities and apply strict conditions for granting construction and environmental permits (Dantuma, 2008). Later, we will look at how neighbourhoods impact on (migrant) entrepreneurship.

3. Methodology

To investigate how the neighbourhood spatial environment and its regulations shape the development prospects of local firms in pre- and post-war migrant neighbourhoods, we follow an exploratory research approach combining quantitative and qualitative methods. The study compares two contrasting types of migrant neighbourhood—namely, pre-World-War-II and post- World-War-II neighbourhoods (hereafter referred to as pre-war and post-war), with rather different spatial morphologies. Pre-war neighbourhoods were built as mixed residential and commercial purposes, while post-war neighbourhoods were primarily designed for residential purposes thereby adhering to the then-dominant modernist view of a spatial separation of living and work environments. To explore potential differences between these neighbourhood types, we have selected five pre-war and post-war migrant neighbourhoods.

3.1 Neighbourhood Selection

The selection of neighbourhoods was based on a number of practical and methodological considerations.¹ First, we restrict our study to residential neighbourhoods in the four largest Dutch cities (Amsterdam, Rotterdam, The Hague and Utrecht) where most migrant neighbourhoods are located. We define residential neighbourhoods as areas with at least 10 private households per hectare built-up area and a number of private households that is at least five times larger than the number of firms. We ranked all residential neighbourhoods on their shares of non-Western inhabitants and then selected the top one-third—the ‘migrant neighbourhoods’. Secondly, the neighbourhoods had to accommodate a sufficient number of firms (50), in order to be able to find enough interview candidates to reach our research targets.² Thirdly, we selected five neighbourhoods that can be seen as typical cases with scores close to the average of the 93 remaining neighbourhoods regarding the share of residents per age group, the average household size, the share of non-Western immigrants, the share of the working population (15–64 years), mean income per resident, neighbourhood dynamics and the mean value of housing.³ In this way, we control for these other variables and can focus on the neighbourhood characteristics. The five typical representatives include three pre-war neighbourhoods— Indische Buurt-Oost and Oosterparkbuurt in Amsterdam and the Regentesse-/Valkenboskwartier-Zuid in The Hague—and two post-war neighbourhoods—Moerwijk-West in The Hague and Overvecht-Neckardreef in Utrecht.

3.2 Data Collection

First, we compare quantitatively local business structures (total firms and firm survival rates per sectors) across the pre- and post-war neighbourhood clusters for the period 2005–07. This comparison is conducted using data (available on a five-digit postal code level)⁴ compiled by the local chambers of commerce for the trade register. These data have their limitations, but prior research (van den Tillaart, 2001) has shown that they are fairly reliable as more than 90 per cent of migrant businesses are registered with the regional chambers of commerce. Secondly, we review the zoning regulations as stated in the neighbourhood zoning plans (Bestemmingsplan), which provide a rich source of information on the regulatory aspects determining spatial use in these neighbourhoods. Thirdly, we draw on primary qualitative data collected in eight focus group discussions with migrant neighbourhood experts as well as 40 interviews with local native (20) and non-Western migrant (20) entrepreneurs. These data were collected in the period from April 2008 to March 2009 and provide us with in-depth descriptions of the local spatial environments and business settings, local institutional arrangements as well as the perceptions and experiences of the entrepreneurs. It was rather hard to get an equal number of entrepreneurs from each neighbourhood, more specifically regarding entrepreneurs from post-war neighbourhoods who relocated their business elsewhere. Although we did manage to interview an equal number of entrepreneurs from the five neighbourhoods of whom half relocated their firm to another neighbourhood, we did not manage to have an equal balance among the movers and our sample is predominantly non-neighbourhood-oriented with 29 firms, compared with 11 neighbourhood-oriented firms.

In the focus groups, we collected contextual data on the five neighbourhoods by interviewing neighbourhood experts in groups of 4–6 people. We held five focus group meetings with local experts of the selected neighbourhoods and, in addition, three general focus groups with experts who were not directly related to a specific neighbourhood. Discussions focused on the local neighbourhood economy in general and on local entrepreneurship in particular. To ensure that our group interviews would generate well-informed discussions on the subject, we invited local experts from a variety of professional backgrounds, such as local administrations, community centres, cultural organisations, business consultancies, police stations, housing associations, financial institutions and academia. To select suitable candidates, we used a questionnaire to screen their relevance for participation. Notwithstanding these efforts, it was rather difficult to obtain the right composition for the focus groups of neighbourhood experts as local police officers and representatives of local business associations were absent. We still think that the diversity in professional backgrounds of the participants was adequate. We thus generated contextual information to triangulate and illustrate our findings.

Alongside the focus group sessions, we conducted 40 face-to-face interviews with local entrepreneurs,⁵ eight in each of the five neighbourhoods. Half of these were with entrepreneurs who relocated their firm to another neighbourhood prior to the interview⁶ to get around the problem of a positive selection bias as stayers tend to overstate the positive aspects of their local production environment. The interviews focused on the entrepreneurs themselves, their motivations, their firms, the locational aspects and how they rate the quality of these aspects at their current firm location. The responses to the structured questions are used in the quantitative analysis on firm location factors and firm success (section 5.3), whereas those to the open-ended questions have been used for quotes.

4. The Built Environment and Zoning Regulations in Pre-war and Post-war Migrant Neighbourhoods

4.1 Building History and General Characteristics

Pre-war neighbourhoods

The three selected pre-war neighbourhoods, Regentesse-/Valkenboskwartier-Zuid (The Hague), Indische Buurt-Oost and Oosterparkbuurt (both Amsterdam) were built in the period 1880–1920 adjacent to the historical city centres. They were designed for mixed residential and commercial purposes whereby the former was prioritised over the latter. The dwellings are characterised by an overall uniform height of around 10–15 metres (3–5 floors) in most parts of the neighbourhoods giving the areas a clearly residential appearance although with business spaces on the ground floor (i.e. corner stores) with higher ceilings, larger windows and separate entrances.

These neighbourhoods have seen similar phases of population growth and decline. In the period between the two World Wars, they attracted mainly working-class families. After the post-war reconstruction period, the neighbourhoods witnessed a population decline with the rise of mass car ownership in the 1960s and exodus to newly built (suburban) neighbourhoods. This population decline was reversed from the late 1980s onwards by the inflow of migrants from less-developed countries—‘guest workers’, who were looking for larger housing to accommodate their families who had come as part of the family reunion schemes, migrants from former Dutch colonies, political refugees and asylum-seekers. These migrants filled many of the vacancies in the local housing markets and transformed the face of the neighbourhoods from predominantly White working-class neighbourhoods to their current multicultural character. Nowadays, many of them are so-called ‘problem neighbourhoods’, neighbourhoods characterised by relatively high levels of deprivation and singled out by the Dutch government for integral neighbourhood improvement schemes.

Post-war neighbourhoods

The two selected post-war neighbourhoods Moerwijk-West (The Hague) and Overvecht-Neckardreef (Utrecht) were built in the period 1950–70 and are situated at some 3–4 km from the city centre. Built to meet the strong demand for suburban housing with generous provisions of open spaces, they provided only few commercial spaces intended to meet the residents’ everyday needs. Apart from that, a clear spatial separation between residential and commercial spaces, almost exclusively located along the major arteries on the edges of the neighbourhoods, was implemented to ensure that business activities did not negatively affect the living environment.

Initially, the neighbourhoods accommodated a predominantly native population, happy to find a house in the post-war era with a shortage of housing. From the 1980s onwards, these neighbourhoods lost much of their appeal and the original population was partly replaced by non-Western migrants. High levels of unemployment and other forms of deprivation made these rather recent neighbourhoods also eligible for urban renewal.

4.2 Pre-war and Post-war Neighbourhoods Compared

The differences in business environment are not confined to just the initial situation and the design of the built environment, but consciously reproduced in the regulatory framework and the recent urban policies. In general, while regulations in pre-war neighbourhoods are rather supportive of commercial activities, they are more restrictive in post-war neighbourhoods, especially regarding non-neighbourhood-oriented firms (not catering to the needs of local residents). In post-war neighbourhoods, local regulations are clearly directed at safeguarding the residential function of the areas, leaving little space for firms and superimposing restrictions on them. Moreover, conversion of use—from residential to commercial purposes and between different commercial purposes—is notably easier in pre-war neighbourhoods, where regulations are relatively liberal enabling a quite smooth conversion of spaces. The same difference can be found in urban renewal policies. In pre-war neighbourhoods, the focus has been on the creation and refurbishment of business spaces (i.e. ground floor expansions and alterations) and on attracting new firms to designated commercial zones, while in post-war neighbourhoods the emphasis was rather on the renovation and replacement of monotonous housing blocks. In addition, the scope of government support for commercial activities in pre-war neighbourhoods is quite broad, encompassing any small business activities not harming the local living environment (by means of excessive noise, pollution, traffic), whereas in post-war neighbourhoods the support is much more selective in terms of type of activity and location.

Based on these differences in built environment, regulatory framework and urban policies, we expect that this relative lack of flexibility in post-war neighbourhoods will result in lower success rates and higher out-migration of firms vis-a-vis pre-war ones.

To explore how the built environment and the zoning regime in pre-war and post-war migrant neighbourhoods impact on local business prospects, we combine the insights generated through the analysis of the data of the chamber of commerce trade register with the data collected in the focus groups and interviews.

5. Business Prospects in Pre-war and Post-war Migrant Neighbourhoods

5.1 A Snapshot of Local Business Landscapes

The data of the chamber of commerce trade register provide a useful overview of neighbourhood businesses at the five-digit postal code level, containing information on the number of firms per sector. Table 1 displays the commercial activities in the pre- and post-war clusters of neighbourhoods, which reveal striking intergroup variation. After controlling for size inequalities in built-up areas, pre-war neighbourhoods clearly are home to more businesses than post-war neighbourhoods (55.4 vs 30.7 firms per 10-hectares of built-up area respectively), a first indication of the spatial use differences between the two types of neighbourhood.

Table 1.

Total firms, sector and neighbourhood distributions, 2006

Business sector classification	Pre-war neighbourhoods		Post-war neighbourhoods
Business sector classification	Total	Total per 10 ha built-up area^b	Total	Total per 10 ha built-up area^b
Neighbourhood-oriented^a	350	20.3	124	14.6
Percentage of neighbourhood total	37		48
Non-neighbourhood-oriented	603	35.1	137	16.1
Percentage of neighbourhood total	63		52
Overall	953	55.4	261	30.7

Neighbourhood-oriented firms operate in the sectors of hotel and catering, personal services, retail and repair. All other firms are non-neighbourhood-oriented.

Includes residential and commercial spaces as well as cultural and public facilities.

Source: Data of neighbourhood built-up areas stem from Netherlands Bureau of Statistics, Statline, 2009; the agricultural sector is excluded because of low numbers.

A second dimension of difference concerns the distribution of sectors. In pre-war neighbourhoods, the number of non-neighbourhood-oriented firms was more than double that in post-war neighbourhoods (35.1 vs 16.1 firms per 10-hectare built-up area). In neighbourhood-oriented activities (including catering and hospitality, personal services, and retail and repair) the difference was smaller (20.3 vs 14.6).⁷ Pre-war neighbourhoods are thus accommodating more businesses in general, and especially non-neighbourhood-oriented ones, than post-war neighbourhoods, to summarise.

5.2 Firm Survival Rates

To compare the average firm survival rates between pre-war and post-war neighbourhoods for the period 2006–07, we distinguish between neighbourhood-oriented and non-neighbourhood-oriented commercial activities. Overall, firm survival seems to be somewhat lower in post-war neighbourhoods than in pre-war ones (90.1 vs 92.5 per cent of a total 2006 firms respectively), a finding that is shared between both neighbourhood-oriented and non-neighbourhood-oriented sectors, but is more pronounced in the latter sectors (90.8 vs 91.5 per cent for neighbourhood-oriented sectors and 89.8 vs 92.9 per cent for non-neighbourhood-oriented sectors respectively).⁸ This finding was corroborated in the interviews. The experts frequently referred to the difference in the spatial design and regulations of the neighbourhoods putting firms in pre-war neighbourhoods at an advantage over those in post-war neighbourhoods on the grounds of higher vitality attracting customers and business-friendlier local regulations

[The neighbourhood] with its nice and diverse stores can be an incubation area for medium and small business … [it is] a sort pearl [neighbourhood with high development potential] (pre-war neighbourhood expert).

I participated in a meeting on the possibility to integrate commercial activities in the local zoning plan … and also we discussed [the combination of] residential and work locations … and then you immediately hear that does not work here (post-war neighbourhood expert).

I say a municipality without policy … if you have no vision of what has to happen [with regard to local businesses development] in the coming 10 years then you have a problem. And the municipal department of economic affairs is a deserted department [meaning: it is understaffed] (post-war neighbourhood expert).

The finding that pre-war and post-war differences in survival rates are relatively smaller for neighbourhood-oriented sectors is probably a consequence of relatively low levels of competition, caused by restrictive local regulations in post-war neighbourhoods boosting local survival rates vis-a-vis those in pre-war neighbourhoods which are near or even past saturation point:

There are many comparable stores, many greengrocery businesses, many butchers, many hair stylists … and I think that a great number simply has difficulties to survive (pre-war neighbourhood expert).

5.3 Firm Location Factors and Business Prospects

Earlier, we identified a number of key location factors that are likely to affect business operations of firms. We have grouped these factors in five groups—namely, local social embeddedness, cost-saving potential, convenience, market potential and spatial needs. We have asked 40 local entrepreneurs in pre- and post-war neighbourhoods to state how these firm location factors affect their businesses. Entrepreneurs were asked to rate the relative importance of these items for business prospects and to indicate how their business location in pre- and post-war neighbourhoods scores on each of them. On the basis of the latter scores on a five-point scale, we can see how pre- and post-war neighbourhoods perform on each location factor. A score above three implies that a location factor is regarded as a business location advantage, a score below that a disadvantage. In addition, entrepreneurs rated the relative importance of the firm location factors, providing information on the relevance of the advantages and disadvantages for business success. We compared the responses between migrant and native entrepreneurs and did not find significant differences in the evaluations between these two groups. The outcomes are shown in Figure 1.

Figure 1.

Firm location factors and success: entrepreneurs in pre-war neighbourhoods (left panel) and post-war neighbourhoods (right panel).

At a more general level, holding for both types of neighbourhood, we find that all of the hypothesised relevant firm location factors, except the neighbourhood’s ethnic population mix and the spatial expansion possibilities for the firm, are seen as important for entrepreneurs’ business prospects. Factors relating to the neighbourhoods’ market potential (neighbourhood cleanliness and safety, firm accessibility/available parking space) appear to be most important for firm development prospects, but also the cost-saving potential (cheap business spaces) and convenience (firm proximity to the entrepreneur’s home) are seen as essential factors affecting development prospects. Contacts with local residents are generally appreciated but seem to have little bearing upon business performance. Unsurprisingly, entrepreneurs consider factors relating to the neighbourhoods’ market potential (neighbourhood image, cleanliness and security situation) as most important for firm prospects as they affect the decisions of (potential) customers to visit these areas. The ethnic population mix is considered less important as entrepreneurs are more concerned about the income mix and, hence, local demand. That firm spatial expansion possibilities are not considered as important to the prospects of firms can be attributed to the fact that migrant neighbourhoods function predominantly as start-up areas, where a great share of entrepreneurs have not yet reached the point when larger spaces become an issue (Weterings et al., 2009; Schutjens et al., 2007).

The selected migrant neighbourhoods share a number of business location advantages and disadvantages. Interestingly, their advantages seem to relate especially to the cost-saving potential (low-cost business space) and to the ‘soft aspects’ among the location factors—namely, to local social embeddedness aspects (contacts with local residents and the local community) and convenience (proximity to the entrepreneur’s home). Combining this finding with our prior observation that migrant neighbourhoods accommodate high shares of local entrepreneurs (who also live in the neighbourhood), this indicates that local entrepreneurs are generally satisfied with operating from home or close to it, keeping costs low and having the convenience of combining work and private lives. Some aspects relating to the market potential of the neighbourhoods (proximity to customers, firm accessibility/availability of parking space) are seen as location advantages. Finally, the spatial needs in terms of expansion possibilities are clearly seen as a location disadvantage. This supports our contention that migrant neighbourhoods are first and foremost start-up locations for their residents and—apart from their low rents, relatively central location and comparatively ample availability of parking space—offer few other advantages for local entrepreneurs. This finding is also by and large confirmed in our focus group discussions with local experts as illustrated by the following quotes

The attractive locations as … are too expensive for starting entrepreneurs, who have a very restricted budget … In addition, they think that people do not come here, not the people you are looking for [customers]. So for that you go and look in another neighbourhood.

I actually notice among my clients originating from this area that when they need firm space, they do not look in their own neighbourhood … They rather go in the direction of [mentions a neighbourhood with a much lower number of migrants], of course, but that is too expensive.

Comparing business location advantages and disadvantages between pre-war and post-war neighbourhoods, a few differences stand out. First, the ethnic population mix is seen as a business location advantage in pre-war neighbourhoods, but a disadvantage in post-war ones. This may be attributed to the fact that the pre-war neighbourhoods have a much longer experience with a multicultural population than the post-war ones where migrants have been a relatively recent phenomenon and perceptions tend to be more negative. It may also be explained by the spatial design of post-war neighbourhoods where clearly separated residential and commercial spaces were intended to generate attractive settings for living but not to foster local social interactions in the streets, as highlighted by the following quote of a post-war neighbourhood expert:

And that [vitality] you miss here, simply, customers do not come here. It is a residential neighbourhood with no reason to be here. You live here, you sleep here but apart from that…

Pre-war neighbourhoods have a far greater number of storefront commercial activities contributing to a vibrant street life with ‘buzzing’ shops, cafes and restaurants. This fosters more social interactions between individuals and groups of people as reflected in the following quotes of pre-war neighbourhood experts

In comparison with other shopping streets, I find [names street name] … nice, because you see a nice mix of us [migrants] and natives. And actually I find that an entrepreneur is an entrepreneur.

When I still lived here I always found it very pleasant to walk through [names street name], to shop there, because it simply has a nice atmosphere.

An interesting difference between pre- and post-war neighbourhoods relates to firm spatial expansion possibilities, which entrepreneurs in both pre- and post-war neighbourhoods rate as a location disadvantage, but this view is clearly more pronounced in the former than in the latter. This somewhat surprising finding has apparently less to do with the more restricting regulations in post-war neighbourhoods, than presumably with relatively constrained business spaces in pre-war neighbourhoods and the lack of suitable (larger) spaces to rent in the neighbourhood.

While entrepreneurs in both pre- and post-war neighbourhoods consider the accessibility/availability of parking space a location advantage, it is interesting to see that this business location factor appears to be rated higher and is also seen as more important to firm success in post-war neighbourhoods (both are significant at the 5 per cent level). This may be explained by a higher incidence of car-based behaviour in post-war neighbourhoods (designed with car use in mind) compared with the much denser and less car-friendly pre-war neighbourhoods. Thus, the competitive edge of businesses in post-war neighbourhoods appears to reside in the cost-saving potential (low-rent business spaces), firm accessibility and availability of parking space. This advantage is stressed by nearly all interviewed entrepreneurs in post-war neighbourhoods, whereas entrepreneurs in pre-war neighbourhoods contemplate their firm’s accessibility by car. The following quotes of an entrepreneur in a pre-war neighbourhood and several entrepreneurs in post-war neighbourhoods illustrate this

Saturday is one of the better [business] days [in this pre-war neighbourhood] … There is a car issue [triggering discussion about the introduction of paid parking] … There are entrepreneurs, so that is three signatures against [paid parking] … and then they ask the residents and in one sweep there are 40 residents in favour because they want to park their cars close by. They also want parking spaces. Even paid ones … ok, but not on Saturday, … but that you cannot bring across to them.

Here [in post-war neighbourhood], I have the advantage of free-of-charge parking in front of the [shop] entrance.

As a starting entrepreneur keeping costs of the business space as low as possible is really important … and the rent here [in post-war neighbourhood] is low.

5.4 Other Aspects Affecting Local Business Prospects

Businesses are also affected by the entrepreneurs’ perceptions of social interactions and disturbance in the neighbourhood, local policies and relations with local authorities, and the level of local amenities. Overall, it appears that entrepreneurs have a rather positive perception of and relation with their local neighbourhoods in line with our earlier findings relating to the role of the so-called soft business location factors. Looking at differences in entrepreneurs’ perceptions of neighbourhood-related characteristics between the two types of neighbourhood, it appears that the intensity of social interactions is perceived to be lower and the degree of disturbance higher in post-war neighbourhoods vis-a-vis pre-war ones. This, again, seems to indicate that the longer-established multicultural character of pre-war neighbourhoods has led to a higher level of social cohesion. Another finding is that entrepreneurs in post-war neighbourhoods tend to have a more negative view of contacts with municipality and police and more positive ones for contacts with housing corporations/property owners. The latter may be related to the ample availability of commercial property in post-war neighbourhoods. The former seems to be the outcome of less business-friendly, local spatial regulations and stricter zoning policies in post-war neighbourhoods. While entrepreneurs in general express that their relations with local authorities are not always easy, entrepreneurs’ difficulties with the existing local regulations and policies, as well as with government communication in post-war neighbourhoods, are certainly graver. These difficulties relate to various aspects ranging from the implementation and co-ordination of public works projects to a lack of service orientation on the side of the authorities and too much red tape. In the words of local experts and a local entrepreneur

There is a foundation managed by the community with currently 25,000 Euro, and the aim is to increase it to 50 000 Euro, and the foundation is for fostering entrepreneurship in [mentions name of pre-war neighbourhood]. And that means that many of the ideas to do with the improvement of stores, houses [can be realised] (local expert of a pre-war neighbourhood).

In the neighbourhood action plan of [mentions name of post-war neighbourhood], a great deal is missing in the area of local economy and entrepreneurship. The word economy that is one of the pillars in all of the neighbourhood action plans, is, evidently, still a very thin pillar … because in post-war neighbourhoods the [business] infrastructure is lacking (local expert of a post-war neighbourhood).

And I called four times [with the municipality], they would send someone, I am still waiting for that someone, they do not listen to anything … But now they stopped [with the road construction] 100 metres from [mentions commercial street in neighbourhood] … and now the buses can still not pass. So shortly we are simply three weeks without buses … And then they break open the road … and so the road is closed for three weeks … It cost the supermarket a mega turnover (entrepreneur in a post-war neighbourhood frustrated about on-going road construction work).

The local presence of amenities has an impact on the local business climate. A higher-end supermarket, street cafes, cultural and sports facilities, can encourage other local businesses as they draw visitors to the neighbourhood and may boost the neighbourhood image. This is especially relevant for firms operating in neighbourhood-oriented sectors, but may also be beneficial for other firms for which neighbourhood image and quality of life are important.

6. Conclusions

A recent study has shown that migrant entrepreneurship is becoming more important in many OECD countries (OECD, 2011). Large numbers of migrants are setting up their own businesses, thereby generating their own income, frequently creating jobs for other migrants and often contributing to the diversity of cities by supplying a different set of goods and services from mainstream shops, restaurants or other businesses. For quite a while, researchers have looked at migrant entrepreneurship and their focus has been mainly on the resources of the migrants and, to a lesser extent, on the opportunities in the sense of markets that can be catered to (Wang, 2012). Typically, we find migrant entrepreneurship in cities as that is where most of the migrants tend to live. In that sense, there was already, albeit for the most part implicit, a spatial dimension in much research. Space was more explicitly drawn into view when the relationship between one particular resource—namely, social capital—and proximity was explored (Ram et al., 2008) or when the role of the local market, more specifically ethnic enclave markets, was looked at (Light, 2004). Notwithstanding this sensitivity to space, the role of the neighbourhood as a provider of business spaces has usually been taken for granted and, hence, neglected by researchers. As many businesses need concrete spaces to function, the match between entrepreneurs and opportunities, and the subsequent success (or lack thereof) of a business are also dependent on the availability of affordable, suitable business spaces in the urban neighbourhoods where many migrants live.

Using this point of departure, we have explored how the structure of the built environment together with the local regulatory framework in traditionally mixed-use pre-war and much more mono-functional post-war residential neighbourhoods in Amsterdam, The Hague, and Utrecht has impacted on businesses. Departing from a large database with 93 residential neighbourhoods with a relatively high proportion of non-Western migrants, we selected three pre-war and two post-war neighbourhoods which scored close to the average of all the neighbourhoods regarding key demographic and socioeconomic characteristics. We thus selected five neighbourhoods which were both most similar and typical for migrant neighbourhoods, while contrasting in terms of built environment. In this way, we were able to tease out the effects of the built environment and zoning plans on the businesses by using both a (quantitative) dataset supplied by the chambers of commerce, and by drawing on interviews and focus groups with entrepreneurs and neighbourhood experts to tease out the different impacts of these spatial and regulatory contexts on business prospects of entrepreneurs.

A first conclusion is that, as we expected, the pre-war migrant neighbourhoods turned out to be more supportive of entrepreneurship than the post-war ones. They have, to use Ray Pahl’s (1984) term, more ‘getting-by potential’. The earlier neighbourhoods not only have more available commercial spaces, but also less restrictive spatial regulations regarding the type of functions (neighbourhood-oriented and non-neighbourhood-oriented businesses) and the transformation from one function to another. These neighbourhoods, hence, offer a larger choice for local entrepreneurs and display a greater flexibility to adjust to changes in the local demand for business spaces than the post-war neighbourhoods. This, in combination with low rents, both makes them more fertile grounds for starting entrepreneurs and increases their chances for survival as the barriers to shift to another function are lower than in post-war neighbourhoods. More specifically, opportunities to set up a business differ considerably between neighbourhood-oriented and non-neighbourhood-oriented economic activities, with the latter faring worse in post-war neighbourhoods. The reason for this seems to be the relatively restrictive local regulations, which aim at confining local commercial activities to those serving the needs of the local residents. A rather unexpected effect of the more restrictive zoning in post-war neighbourhoods is that the businesses located there tend to face less competition than the pre-war neighbourhoods nearing or at the point of saturation. This creates protected local markets for the already established firms and enhances their chances for survival.

Secondly, the long-standing tradition of a mix of functions and the broad acceptance of a diverse and dense fabric of small economic activities in pre-war neighbourhoods not just by the inhabitants of the pre-war neighbourhoods but also by the policy-makers has led to higher levels of support for businesses from local authorities. This is also reflected in the urban renewal plans (instigated at a national level) which are more welcoming to businesses than in post-war neighbourhoods.

Thirdly, it appears that the rules and regulations of the zoning plans are important in reproducing the initial situation of the neighbourhoods as regards the mix or separation of functions. The built environment itself may even be easier to adjust to a different mix of functions by remodelling or furbishing as the zoning plans apparently have a significant in-built inertia and stay in place even after the composition of the population and the economic base of the neighbourhood has changed. Vested interest and support by local authorities generate a path-dependent trajectory for economic functioning of the neighbourhoods (see Folmer and Risselada, 2012).

Fourthly, the dense pre-war neighbourhoods show a higher level of acceptance of the multicultural character of the neighbourhood than their post-war counterparts. This may be explained by the longer history of the presence of migrants, but it might also be linked to a greater intensity of encounters on the streets creating a higher level of conviviality than in the car-friendly post-war neighbourhoods.

The local built and regulatory environment does indeed appear to impact significantly on the chances to set up a business and its subsequent fate. By and large, pre-war neighbourhoods are more suited to accommodate (migrant) entrepreneurship than their post-war successors. Restrictive zoning in mono-functional, residential environments appears to hamper the matching of aspiring entrepreneurs and opportunities and, moreover, thwarts the expansion of already successful businesses. Once again, Jane Jacobs’ (1961) view of diverse, mixed-use urban neighbourhoods as vibrant and resilient, formulated almost half a century ago, seems to be vindicated, and policy-makers should heed these lessons when considering zoning plans.

Footnotes

Acknowledgements

The authors would like to thank Veronique Schutjens (Utrecht University) and Bart Sleutjes (University of Amsterdam) for their valuable input and cooperation while setting up and conducting the fieldwork, and the Chamber of Commerce Amsterdam (Jan Jans and colleagues) for making available the data on firm mobility in the research neighbourhoods.

Funding

This work was financially supported by FORUM (the Institute for Multicultural Affairs).

Notes

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