Blog

By: Dr. Kumar Gurung (Ph.D.,MS.,MCEC.,LLB.)

Another recurrent theme in the literature pertains to the country-of-origin benefits as possessed by immigrant entrepreneurs. In this regard, it has been distinguished that immigrant entrepreneurs possess the capabilities necessary to access and make use of the entrepreneurial opportunities and resources of their countries of origin despite their not being able to take complete advantage of the entrepreneurial ecosystem of the host country due to blocked mobility (Grujic, 2019). By extension, immigrant entrepreneurship, being both an economic and social phenomenon, can only be best understood by investigating the perspectives of both the host country and country of origin.

When these perspectives are considered, it becomes clearer that contrary to the view that immigrant entrepreneurs reap the most benefits from their host countries, they tend to benefit from
the entrepreneurial ecosystems of both the host and home countries. These benefits vary from country to country, often depending on country-specific economic conditions and related attributes (Roundy & Fayard, 2020). Still, the co-effects of the dual entrepreneurial ecosystems often lead to higher rates of both business and entrepreneurial success within specific groups of immigrants (Lilius & Hewidy, 2019). Therefore, those responsible for the formulation of policies in general
and economic policies can harness the benefits and power of immigrant entrepreneurs to spur or increase economic activities through, among other ways, the development and deployment of
programs designed to encourage immigrants to embed in the host country and country of origin entrepreneurial ecosystems (Windzio, 2015; March-Chorda, 2021). These findings support the
popular and widely accepted view that immigrant entrepreneurship is influenced mainly by personal attributes, the entrepreneurial environment of the host country, the country-of-origin factors, and co-ethnic community characteristics (Song, 2019).

Therefore, entrepreneurship among immigrants cannot – and ought not to be – explained or accounted for using just one factor, such as the host country characteristics (especially the
entrepreneurial ecosystem of the host country). Instead, the other factors have to be considered as well. Even though the entrepreneurial environment of the host country plays one of the essential roles in influencing immigrant entrepreneurship (Roundy & Fayard, 2020), the other factors are no less significant. In an interconnected world characterized by globalization and increased (almost unrestricted) movement of human resources, home country factors are increasingly playing a pivotal role in influencing immigrant entrepreneurship. It is because immigrants are increasingly having contact – direct or indirect – with their home country and, in doing so, utilize the home country entrepreneurial ecosystem to further their entrepreneurship abroad (Pung et al., 2017)

While this practice was still possible before the advent of globalization, it has increased markedly due to the ease with which immigrants can connect with people and other resources back in their home countries without necessarily having to be physically present. This, in turn, means that even immigrants’ movements are restricted by virtue of their status as immigrants; they can still tap in and use resources from their home country to advance or support their entrepreneurship in their host countries (Brzozowski, 2016; Dutta et al., 2021).

Other than the home country factors, the other important but often overlooked or underrated factor affecting immigrant entrepreneurs is their attributes (Audretsch et al., 2019). According to Pardos & Xena (2019), every human being is unique in different respects, and this uniqueness remains
with the individual regardless of whether he/she lives and works (in the home country or abroad). Some of the most important personal attributes that influence an individual’s entrepreneurial
capabilities include levels of education, attitude towards saving and amount of savings one has, work experience, ambitions, migratory experience, language skills, legal status, and age. Others are the purpose of migration, marital status, gender, risk-taking attitude, and the length of stay in a host country (Pardos & Xena, 2019). As an example, risk-averse people are less likely to become entrepreneurs in a new country, while those who are risk-takers are not only likely to become entrepreneurs but successful entrepreneurs as well. Similarly, ambitious immigrants are more
likely to become entrepreneurs in a new country than less ambitious immigrants. Thus, combined with other factors, personal factors play an essential role in influencing the entrepreneurship of immigrants (Pardos & Xena, 2019).

The issue of regional competitiveness is vital to the success of any immigrant entrepreneur. Regional competitive advantage is of great importance in supporting overall global competitiveness; this is why any entrepreneurial ecosystem promotes competitive advantage (Acs et al., 2017). Today, different models attempt or endeavor to explain the functioning of entrepreneurial ecosystems. However, the associations and interactions between the various elements constitute an entrepreneurial ecosystem. According to network theory, there are different and unique entrepreneurial ecosystem conditions that grow in specific locations; and any given entrepreneurial ecosystem influences regional competitive advantage by way of different mechanisms such as reduction of transactional costs, productive entrepreneurship, transfer of knowledge, and innovation (Grujic, 2019; Roundy & Fayard, 2020)

By: Dr. Kumar Gurung (Ph.D.,MS.,MCEC.,LLB.)

One of the fundamental phenomena of the second decade of the 21st century (and one that becomes of great international interest) is immigrant entrepreneurship (Igboamazu, 2016; March-Chorda, 2021). Immigrant entrepreneurs are growing in the host countries, including in the U.S. (Awotoye, & Singh, 2018). They have started the business in the cities where they have relocated to (Lilius, & Hewidy, 2019); however, their firms are more likely to fade away and fail due to the demands of immigration (Pung et al., 2017). The Demands (Problems) of Immigration (DI) comprises six correlated, reliable, valid scales determined by Brady et al. (2021). They are language barriers, sense of loss, not feeling at home, perceived discrimination, novelty, and occupation (Pung et al., 2017). Furthermore, it impacts immigrant entrepreneurs’ intentions to engage in three specific entrepreneurial behaviors: venture formation, growth, and abandonment (Awotoye & Singh, 2018).

Vedula & Kim (2019) demonstrated that immigrant entrepreneurial ventures fail or fade away because of the lower quality of the entrepreneurial ecosystem. Further, Igboamazu’s (2016) and Northwood & Sherrie (2018) research uncover financial limitation as to the first worry for immigrants. They face difficulty acquiring startup loans from the banks because they lack the banks’ requisite collateral (Khosa & Kalitanyi, 2015). They have to work several jobs for startup funds since they have no inherited wealth (Igboamazu, 2016).

If the problem continues, the firms created by immigrants will have higher exit rates (Mata, & Alves, 2018); due to the demands of immigration (Ding, 2011), general barriers. Such barriers will
reduce immigrant entrepreneurs’ intentions to grow their firms and increase the intentions to abandon them (Awotoye & Singh, 2018). The immigrants who arrived between 1987 and 1996
exceed natives in personal income and homeownership (Kerwin, 2018). According to Vedula & Kim (2019), higher quality of entrepreneurial ecosystems shelters entrepreneur ventures, while ventures in weaker ecosystems are more likely to fade away and fail. For serial entrepreneurs, ecosystem quality has a much smaller impact on venture survival (Vedula, & Kim, 2019).
Immigrants have higher business ownership rates than native-born citizens (Fairlie & Lofstrom, 2015; Dutta et al., 2021).

Across the world, immigrants in general and immigrant entrepreneurs face immense challenges because they often lack an adequate understanding of the business environment of their host countries (Deschamps, 2020). Moreover, while both male and female immigrants tend to be affected, women tend to be more affected for different reasons (Brieger & Gielnik, 2021). To
understand these disproportionate effects on women, one has to appreciate that women more than men are likely to migrate across the world, not necessarily out of choice but because of events beyond their control, such as conflicts, natural disasters, and poverty (Brieger & Gielnik, 2021). In addition, family, labor, and marriage also tend to make it more likely that women will migrate more frequently than men (Brady et al., 2021). For instance, data released by the World Migration Report in 2019 indicated that women made up 48% of all international migrants in that year,
leading to over 130 million migrant women. However, it is also a fact that women tend to be grossly underrepresented in entrepreneurship both in their home countries and abroad (where they have migrated) (Praetorius et al., 2016; Dutta et al., 2021). The main challenge in this regard is that even though it is widely accepted that migration has become feminized, the effects of the feminization of migration are not well known (Brady et al., 2021).

Therefore, the lack of an interdisciplinary and intersectional approach and inherent biases have led to the diminished understanding of the role those migrant women play as entrepreneurs and contributors to global business (Brieger & Gielnik, 2021). Today, the concept of female entrepreneurship capacity and the framing of highly skilled migrant women remains underexamined even though the entrepreneurial capacity building is one of the widely debated topics in the literature (Van Kooy, 2016; March-Chorda, 2021). Therefore, addressing these gaps in knowledge (by understanding the entrepreneurial experiences of highly skilled female migrants) is critical in understanding whether the quality entrepreneurial ecosystem would subdue the demands of immigration and other general barriers of the immigrant entrepreneurs in the U.S. (Aman et al., 2021).

From the outset, it is worth noting that immigrant entrepreneurs usually start or expand businesses in the cities they have relocated with the hope of advancing their entrepreneurial skills of simply earning a living (Awotoye & Singh, 2018; Pung et al., 2017). However, businesses belonging to immigrant entrepreneurs face many challenges, some of which are insurmountable. This explains the high risk of business collapse experienced among businesses owned by immigrant
entrepreneurs relative to those owned by native entrepreneurs. Regardless of whether the businesses set up by immigrant entrepreneurs fade away, fail, or exit, different reasons account for this; and the most notable include language barriers, sense of loss, not feeling at home, perceived discrimination (Pung et al., 2017). These barriers are best articulated and measured by the
Demands of Immigration (DI) scale, comprised of six correlated, reliable, and valid scales (Brady et al., 2021). The scale addresses language barriers, sense of loss, not feeling at home, perceived
discrimination, novelty, and occupation (Pung et al., 2017). When taken together, these barriers effectively make up the challenges that impact immigrant entrepreneurs’ intentions to engage in
three specific entrepreneurial behaviors: venture formation, growth, and abandonment (Awotoye & Singh, 2018).

According to Vedula and Kim (2019), immigrant entrepreneurial ventures are more likely to fail or fade away due to the comparatively lower-quality entrepreneurial ecosystem these ventures operate in or are exposed to Igboamazu (2016) and March-Chorda, 2021) shared this view in part, who argues that financial limitations are among the major causes of problems and even failure or fading way of businesses set up by immigrants. Thus, it is his view that financial constraints are significant factors impeding immigrants’ business success. The same line of argumentation is upheld by Khosa and Kalitanyi (2015) and Northwood & Sherrie (2018), who contend that immigrant entrepreneurs face difficulties acquiring startup loans from the banks because they lack the banks’ requisite collateral. Therefore, these immigrants are often forced to work several jobs to save enough startup capital since they have lacked any inherited wealth (Igboamazu, 2016).

Yet, it remains a reality that immigrant entrepreneurs make essential contributions to the economic growth and development of the U.S. (Kerr & Kerr, 2018), a fact that makes it ever so important to confirm that the many challenges they face are addressed or at least limited. In this regard, the entrepreneurial ecosystem helps produce entrepreneurship in a geographic area, among individuals, organizations, and institutions (Brown & Mason, 2017). The entrepreneurial ecosystem is often descriptive rather than theoretical and does not emphasize the linkages between ecosystem forces and entrepreneurial activities (Stam & Spigel, 2016). Subsequently, whatever obstacles immigrant entrepreneurs face are likely to lower their intentions to grow their firms while increasing their intentions to quit (Awotoye & Singh, 2018).

By: Dr. Kumar Gurung (Ph.D., MS., MCEC., LLB.)

Immigrants are the people who move to host countries (where they are not natives) to settle permanently, seeking economic opportunity, political refuge, and religious freedom (Awotoye & Singh, 2018; Bernstein et al, 2019; Ugarte et al, 2020). They are growing in the host countries, including the USA (Berg, 2015; Awotoye & Singh, 2018). Immigrant entrepreneurs (IE) are permanent residents or naturalized citizens who create or expand economic activity to explore new products, markets, or processes, thereby generating value
(Ahmad & Seymour, 2008)They could be replicative or innovative. Creative entrepreneurs engage in business activities related to a new product, service, or product creation strategy, or conveyance
(Griffiths et al, 2012; Igboamazu, 2016). According to Awotoye & Singh (2018); Pung et al. (2017), immigrant entrepreneurs have started businesses in the cities they have relocated to (Lilius & Hewidy, 2019); however, their firms are more likely to fade away, fail, or exit. The reasons for these are language barriers, a sense of loss, not feeling at home, and perceived discrimination.
etc., as measured by the DI scale (Brady et al., 2021).

The Demands of Immigration (DI) scale is comprised of six correlated, reliable, valid scales determined by Brady et al. (2021) addressing language barriers, sense of loss, not feeling at home,
perceived discrimination, novelty, and occupation (Pung et al., 2017). It impacts immigrant entrepreneurs’ intentions to engage in three specific entrepreneurial behaviors: venture formation,
growth, and abandonment (Awotoye & Singh, 2018). Vedula and Kim (2019) demonstrated that immigrant entrepreneurial ventures fail or fade away because of the entrepreneurial ecosystem’s lower quality.

Further, Malki et al. (2022) research also uncovers financial limitations as to the first worry for immigrants. All participants in his study agreed that financial constrain is a significant factor in
their business success. Immigrant entrepreneurs face difficulty acquiring start-up loans from the banks because they lack the banks’ requisite collateral (Khosa & Kalitanyi, 2015). They have to
work several jobs for start-up funds since they have no inherited wealth (Igboamazu, 2016; Malki et al., 2022). If this group of entrepreneurs does not form, grow, or instead fade away, fail, or
abandon firms, it will negatively impact the U.S. economy with the increase in the unemployment rate and the absenteeism of innovations (Kerr & Kerr, 2018; Jensen & Laurie, 2017). According to
Brzozowski (2016), the research primarily focuses on a small number of countries with few popular immigrant societies and is not studied noticeably from their entrepreneurial perspective.

If the problem persists, the firms created by immigrants will consequently have higher exit rates (Mata & Alves, 2018); due to the demands of immigration (Brady et al., 2021) and lack of a quality entrepreneurial ecosystem (Vedula & Kim, 2019). The entrepreneurial ecosystem is a structure of interconnected stakeholders, including customers, investors, mentors, suppliers, and employees (Cavallo et al., 2019). According to Welter (2011), it is economic, social, and cultural forces. It helps produce entrepreneurship in a geographic area, individuals, organizations, and institutions (Brown & Mason, 2017; Kuckertz, 2019; Spigel & Harrison, 2018). The entrepreneurial ecosystem often descriptive rather than theoretical (Roundy & Fayard, 2020) and does not emphasize the linkages between ecosystem forces and entrepreneurial activities (Stam & Spigel, 2016). The stress

and obstacles immigrant entrepreneurs face will reduce their intentions to grow their firms and increase their intentions to abandon (Awotoye & Singh, 2018).

The immigrants who arrived between 1987 and 1996 exceed natives in personal income and homeownership 41% vs. 37% (Kerwin, 2018). According to Vedula and Kim (2019), higher
quality of entrepreneurial ecosystems shelters entrepreneur ventures, while ventures in weaker ecosystems are more likely to fade away and fail. For serial entrepreneurs, ecosystem quality has a much smaller impact on venture survival (Vedula & Kim, 2019). Therefore, this research will consider whether the Quality Entrepreneurial Ecosystem (QEE) will contribute to overcoming the demands of immigration (DI), as stated by Vedula and Kim (2019). Qualitative research effectively addresses grand challenges and develops an insightful theory that explores the factors influencing entrepreneurial activities in the immigrant environment (Awotoye & Singh, 2018; Eisenhardt et al.,2016).

In many European countries, including the United States, immigrants have higher business ownership rates than native-born citizens (Fairlie & Lofstrom, 2015). According to Bernstein et al. (2019), the firms’ immigrants establish value to the U.S. through tax revenue, innovation, and employment creation (Jensen & Laurie, 2017). Elon Musk, Steeve Jobs, Sergey Brin, Arianna Huffington, and Peter Thiel are well-known, successful immigrant entrepreneurs in the U.S. (Bernstein et al., 2019). A growing academic literature confirms that high-skilled immigrants
provide long-lasting benefits to the U.S. economy (Jensen & Laurie, 2017) through entrepreneurship, job creation, and innovation (Bernstein et al., 2019).

Recent research using data from the Survey of Small Business Owners found that the first- generation immigrants created about 25% of firms in the U.S. (Pekkala & Kerr, 2020) and founded
90 U.S listed enterprises on Fortune 500 (Brzozowski, 2016). The second-generation immigrants who have at least one foreign-born parent is over 40 million in the USA, and they are also
anticipated to impact the U.S. economy if the host country extends solidarity (Ugarte Gurrutxaga et al., 2020; Sanderson et al., 2021; Grigorieff et al., 2020). In states with more significant immigrant populations like New York, New Jersey, and California, the first-generation immigrants created more than 40% of the firm (Kerr & Kerr, 2018). According to 2006-2010 estimates, the American Community Survey found that 18.2% of business owners represent all U.S. business types (Fairlie & Lofstrom, 2015). Further, they accounted for 16.3% of the total U.S. workforce, with four million employees working with second-generation immigrant firms (Kerr & Kerr, 2018). Therefore, to address immigrant entrepreneurs’ needs by finding an empirical support system is essential as they denote a significant percentage of growing entrepreneurs in the U.S. (Awotoye &
Singh, 2018).

Awotoye and Singh (2018) highlighted that immigrant found or remained in ventures irrespective of their stress level (Vandor & Franke, 2016; Kerr & Kerr, 2016) because they have a higher level
of resilience as compared to non-immigrants. Entrepreneurial resilience involves adaptation to the challenges resulting in liquidation, bankruptcy, or closure (Awotoye & Singh, 2018). Research has revealed that resilience is positively associated with continuous improvement in challenging times
(Chadwick & Raver, 2013), the health of entrepreneurs and their firms (Virginie & Olivier, 2012) and firm success (Fisher et al., 2016). Higher entrepreneurial resilience will lower intentions to
abandon the business (Awotoye & Singh, 2018); however, the entrepreneurs might have more

significant penalties if things do not improve as anticipated. Thus, a high-quality entrepreneurial ecosystem might be a solution for immigrant entrepreneurs (Vedula & Kim, 2019).

By: Dr. Kumar Gurung (Ph.D.,MS.,MCEC.,LLB.)Immigrants have long been portrayed as people acting in segregated communities and who, for the most part at least, tend to set up businesses that could be of lower risk and lower returns (Fairlie & Lofstrom, 2015; March-Chorda, 2021). However, it remains relatively challenging to connect immigrant entrepreneurs and the entrepreneurial ecosystems; and this is a challenge that ought to be overcome for immigrants are to become effectively and thoroughly uninvolved in the entrepreneurial ecosystem. Any understanding of the real impact of entrepreneurship on the economy of any country must be commensurate with undertaking a holistic examination of the concerned country’s entrepreneurial ecosystem.

For example, the U.S. is one of the few countries globally with an exemplary entrepreneurialecosystem mainly because it tends to be reasonably robust in most areas of entrepreneurship (Camarota & Zeigler, 2016; Awotoye & Singh, 2018). By extension, the U.S. has recognized the fact that entrepreneurship – be it by its citizens or the many immigrants who reside in the country –
plays a crucial role in its economic growth and development and has responded by creating and implementing policy initiatives to specifically encourage entrepreneurial behavior (Bernstein,
Brown, & Brown, 2019). With the cultivation of a culture of motivation and determination, this practice has made the U.S. one of the most incredible places for virtually anyone to be an
entrepreneur. This partly explains why the U.S. is ranked by the Global Entrepreneurship Index (GEDI) as the world’s most entrepreneurial country (Awotoye & Singh, 2018).

One issue that tends to be overlooked or whose importance tends to be minimized is the significant role of immigrant entrepreneurs in the economic success of the U.S. Given that GEDI relies heavily on the entrepreneurial ecosystem’s health in assessing a given country’s level of entrepreneurship,
American economic success may be significantly impacted if immigrant entrepreneurs could transfer their talent back to their countries of origin. The reality is that this depends on whether
prevailing economic conditions make it favorable to transfer such talent (Igboamazu, 2016). Therefore, it has been contended that to some extent, the continued stay of the U.S. on the top of the
rest of the world as the most entrepreneurial country is likely to change if its many immigrants found it economically rewarding to transfer their talents to their countries of origin (Bernstein et
al., 2019).

Among other reasons, immigrants tend to be less involved or uninvolved in the entrepreneurial ecosystem because of the lack of information regarding how the entrepreneurial ecosystem could facilitate the entrepreneurship of immigrants (Xu et al., 2019). However, it is still possible for the entrepreneurial ecosystem to facilitate the entrepreneurship of immigrants in different ways, such as through alternative ways of financing, provision of microloans, enhanced and equal access to opportunities, and the adoption and use of drive and experimentation (Ram et al., 2017). It can be achieved through the provision of access to new and emerging markets, contacts with business partners and early customers, assistance in the translation and understanding of the language of the host country, workshops and seminars, free working space, and consultancy in different areas of business (such as legal regulation, preparation of business plans, and accounting) (Picanço Cruz, & de Queiroz Falcão, 2016). However, the problem that often arises is not necessarily the availability

of these and other resources but the lack of a link between the available resources and the immigrant entrepreneurs. In essence, resources tend to be almost always available to immigrant
entrepreneurs, but these entrepreneurs are usually unaware of their existence. It means that if immigrant entrepreneurs’ benefit from the entrepreneurial ecosystem truly, this link has to be
improved (Naumann et al., 2018).

related problem pertains to the language barrier, making it hard or sometimes impossible for immigrant entrepreneurs to communicate effectively with their customers. This concern is
compounded by the natural tendency by local people to distrust foreign business operators, especially those who are immigrants without citizenship or Permanent Residency status (Roundy
& Fayard, 2020). Therefore, effective utilization of the entrepreneurial ecosystem has to include (if not begin with) the implementation of deliberate measures designed to improve communication and address trust issues. Therefore, helping immigrant entrepreneurs learn the local language or the
language widely used for commercial, or business purposes could be an essential starting point. Fortunately, most customers tend to be more trusting of immigrants in general and immigrant
entrepreneurs if these immigrants speak and understand the language of these customers (Acs et al., 2017). Therefore, learning the local language could help immigrant entrepreneurs overcome the language barrier and that of trust.

Overall, there is a necessity for more strategic approaches to all immigrant entrepreneurs as a special kind of sub-group that is particularly vulnerable in society and the entrepreneurial system
(and therefore needs more specialized or urgent attention). Such an approach could help mobilize necessary or resources to help immigrant entrepreneurs better cope with their unique challenges. These challenges, if left unaddressed, would undermine immigrant entrepreneurship as a whole
and, by extension, hurt the economies of many nation-states and especially those with significant populations of immigrant entrepreneurs (Ngongoni et al., 2017).

To better understand the effects or likely effects of a quality entrepreneurial ecosystem on immigrant entrepreneurship, it is essential first to understand the extent to which immigrant
entrepreneurs in the U.S. start new businesses. This is crucial because it would make little or no economic sense for the issue to be investigated when only a few immigrant entrepreneurs in the
U.S. Towards this end, it is now a fact that out of all new business startups in the U.S., almost one- third are started by immigrant entrepreneurs (Pekkala Kerr & Kerr, 2020). It implies that if all
immigrant enterprises were to fade or collapse, the U.S. would effectively lose almost one-third of all its new business startups. Yet, the main problem for immigrant enterprises is not that they are difficult or impossible to start but that they tend to fade and even collapse within the first five years (Bernstein et al., 2019). This is in turn attributed to the fact that, to a large extent and for the most part, immigrant entrepreneurs do not have the relevant expertise or knowledge necessary to evolve their enterprises beyond the ethnic enclave, which is effectively the locale of their businesses (González & Campbell, 2018).

Unfortunately, this tendency by immigrant businesses to not evolve beyond their ethnic enclaves is a major undoing for the businesses and their owners as it makes the business overly and often unnecessarily depend on the entrepreneurs’ ethnic communities (Mata & Alves, 2018). To succeed in the highly challenging and competitive global business environment, new business startups, even if they are owned and operated by nonimmigrants, have to endeavor to break away from the

ethnic enclave and possibly adopt a global or at least national outlook. This way, it becomes easier for these businesses to compete more effectively with rival ones. When these business startups are owned by immigrants with limited or no knowledge of (or expertise in) the local business environment, it becomes even more vital for them to evolve beyond their ethnic enclaves
(Audretsch et al., 2019).

To expand out of their enclaves, immigrant entrepreneurs need to adopt and use three main strategies. These are seeking and nurturing professional development and mentorship relationships
to gain access to and obtain financial resources, opportunities, and advice; achieving cultural and language proficiency of the host country or and community; and adopting a multicultural
hybridism model to change the internal makeup of the employee base to include managerial and labor resources that are more interethnic (Shwetzer et al., 2019). In addition to these three main
strategies, there is a need for immigrant entrepreneurs to be individually ready to seize and makeuse of opportunities and be tenacious when it comes to their business efforts (González &
Campbell, 2018). As would be expected, these strategies are not all to address the challenges that immigrant-owned enterprises face. Instead, they can serve as an essential starting point because when immigrant-owned enterprises manage to break out of their ethnic enclaves, their chance of breaking even increases significantly (Lilius & Hewidy, 2019)

Understanding Capital Structure: The Financial Backbone of Every Enterprise

Every successful business stands on a carefully balanced financial foundation known as its capital structure, a mix of debt and equity used to fund operations, expansion, and innovation. For the companies under Dr. Kumar Gurung Enterprises, including real estate ventures, event spaces, nonprofit organizations, and technology startups, managing this balance is crucial to ensure long-term growth and stability.
In essence, capital structure is how a company finances its assets through debt (bank loans, bonds) and equity (preferred stocks, common stocks, and retained earnings). The right blend determines not only profitability but also resilience in uncertain markets.
For instance, if one of our enterprises operates with 40% debt and 60% equity, it means the company is moderately leveraged. Too much debt may amplify returns, but also increases risk due to higher interest obligations. Therefore, maintaining an optimal capital structure becomes essential to minimize financial risk while maximizing shareholder value.

The Financial Manager: Architect of the Company’s Wealth

Behind every sound capital structure is a strategic financial manager—someone who ensures the right balance between growth and safety. In Dr. Kumar Gurung Enterprises, financial managers play a vital role in:

• Analyzing investment opportunities and cash flow
• Forecasting profitability and preparing financial reports
• Evaluating whether to finance through debt, equity, or a hybrid model
  
  Their primary goal? To maximize shareholder wealth while maintaining financial health.For example, if one subsidiary’s debt-to-equity ratio reaches 6:1, it signals high risk. A financial manager may respond by restructuring—perhaps converting debt into equity or negotiating with preferred shareholders to stabilize the ratio. Such proactive measures protect both investors and the long-term value of the enterprise
  

Financial Leverage: The Double-Edged Sword

Financial leverage refers to the extent a company relies on borrowed funds to enhance its return on investment (ROI). While leverage can boost profits, excessive borrowing can erode stability.
The formula is simple:
Financial Leverage = Total Debt / Shareholders’ Equity
If an enterprise under Dr. Kumar Gurung Enterprises has total debt of $4 million and equity of $2 million, its leverage ratio is 2:1—a manageable level. However, if debt continues to rise without proportional equity growth, the firm’s risk profile escalates. By 2018, for instance, a leverage ratio of 5:1 could signal vulnerability, making debt management an urgent priority.

Tradeoff Theory: Balancing Risk and Reward

The Tradeoff Theory of Capital Structure suggests that firms seek a balance between the tax benefits of debt and the risk of bankruptcy. Debt provides a tax advantage since interest payments are deductible, but too much debt increases financial distress costs. At Dr. Kumar Gurung Enterprises, this theory is reflected in how we approach financing large projects—such as property acquisitions or business expansions. We evaluate the cost of debt, tax implications, and potential risk exposure before deciding the proportion of borrowed versus owned capital. This ensures that while we take advantage of debt’s tax benefits, we remain financially sustainable.

Signaling Theory and the Theory of Constraints: Managing Perception and Performance

The Signaling Theory proposes that positive financial actions—like increasing dividends signal confidence and growth potential. For example, when one of our event subsidiaries announces a dividend increase, it reflects the company’s strong cash flow and commitment to rewarding investors.
Meanwhile, the Theory of Constraints (TOC) emphasizes removing bottlenecks that hinder performance. Within Dr. Kumar Gurung Enterprises, managers apply TOC principles by:

• Setting measurable goals
• Identifying obstacles
• Optimizing key processes
• Supporting efficiency improvements
• Preparing for the next challenge
  
  By continuously addressing constraints, each division, from real estate to hospitality, enhances productivity
  

Pecking Order and Windows of Opportunity: Timing Is Everything

According to the Pecking Order Hypothesis, companies prefer to finance operations using internal funds (retained earnings) before seeking external capital. This is evident in how Dr. Kumar Gurung Enterprises funds its growth, prioritizing reinvestment of profits from successful projects before taking loans or issuing shares.
The Windows of Opportunity Theory adds another dimension—recognizing when to act. In fast-moving sectors such as digital platforms or real estate investment, opportunities often appear for a limited time. For example, our decision to invest in prime Omaha properties or to launch TOKMA, a digital service marketplace, reflected strategic timing, leveraging market openings before they closed.

Practical Implications Across Dr. Kumar Gurung Enterprises

The diverse companies under Dr. Kumar Gurung Enterprises—ranging from Great Events Center to Gurung Brothers RE, American Skyline Investment Group, Asian Menu, UNHCR, and TOKMA Technologies—each requires tailored capital structures:

• Great Events Center: Balances equity investments and moderate debt to maintain liquidity during seasonal fluctuations
• American Skyline & Gurung Brothers RE: Employs strategic leverage in real estate acquisitions while maintaining a target DSCR (Debt Service Coverage Ratio) of 1.25x or higher.
• TOKMA Corporation and IIC: Focuses on equity-based financing to fuel innovation and minimize early-stage debt risks.
  
  These examples demonstrate how theory meets practice—where financial models translate into real-world decision-making that sustains enterprise growth.
  

Conclusion: The Art of Financial Balance

Capital structure is not just a theoretical concept; it’s a strategic compass guiding every decision within Dr. Kumar Gurung Enterprises. The right mix of debt and equity determines how efficiently we can grow, how resiliently we can withstand risks, and how confidently we can expand into new horizons.
A company’s future depends on understanding and applying these principles not as rigid formulas but as flexible tools for navigating dynamic markets. At Dr. Kumar Gurung Enterprises,
Every decision reflects this philosophy: measured risk, strategic leverage, and sustainable growth.

Introduction

Every business seeking financing must demonstrate strong financial health through pro forma statements—projected income and balance sheets that help assess sustainability and growth. In
this analysis, I developed pro forma financial statements for Gurung Brothers Supermarket (GBS) for 2019 and compared them with past years (2017 and 2018). The findings indicate a
sustainable growth rate of 15%, signaling solid financial performance. Sales, earnings, equity, and cash flow have all increased consistently, making GBS an attractive investment option for potential investors. Alongside this financial assessment, I conducted a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to evaluate the Company’s strategic positioning. This analysis has enabled GBS to set clear goals, modernize its operations, and align itself with the evolving trends of 21st-century retailing.

Understanding the Company’s Growth Rate

Growth rate is one of the clearest indicators of a company’s health and potential. Analysts often examine four key metrics: sales growth, earnings growth, equity growth, and operating cash flow growth. When these indicators move in tandem, they paint a picture of financial strength, suggesting that the Company is performing efficiently and sustainably. For Gurung Brothers
Supermarket (GBS), based in Omaha, Nebraska, the historical data shows consistent improvement across all four metrics. The Company’s estimated annual growth rate is 15%, supported by its
2017–2019 income statements and balance sheets. The performance 2019 statement also projects a need for an additional $50,000 in external funding, which will be directed toward modernizing traditional retail through e-commerce integration—specifically, an MLM (multi-level marketing)
A plugin that will expand merchandise options and customer reach.

Why External Funding is Essential

The retail landscape is undergoing rapid transformation. While e-commerce accounted for about 12% of global retail in 2018, consumers still value in-person experiences—especially for
perishable goods and products that require tactile inspection. Between 2017 and 2018, over 6,000 US storefronts closed, resulting in the displacement of millions of workers. Retail giants such as Walmart, Target, Home Depot, and Costco have expanded into e-commerce to remain competitive, while Amazon continues to dominate online retailing. To thrive in this hybrid environment, businesses like GBS must integrate storefront operations with digital platforms. Technological innovation—ranging from inventory systems and CRM software to online marketing and logistics tools—has become indispensable. As noted by Agrawal & Dixit (2017), e-commerce has revolutionized both global and domestic economies. For GBS, the integration of these technologies represents not only survival but expansion. Thus, the proorma statement for 2019 justifies seeking external funds to strengthen the Company’s infrastructure, blending traditional retail with modern e-commerce capabilities.

Growth Highlights: 2017–2019

The data comparison between 2017, 2018, and the projected 2019 statements reveals several key findings:

• Sales increased steadily, maintaining a 15% annual growth rate.
• Earnings, equity, and cash flow followed a parallel trajectory, showing operational balance.
• Income and asset accounts rose proportionally with sales, reflecting efficient resource use.
• Dividend payouts remained consistent, underscoring responsible financial management.
  In summary, GBS maintains strong and sustainable growth, offering confidence to both investors and stakeholders.
  

SWOT Analysis: Gurung Brothers Supermarket

A SWOT analysis helps identify both internal and external factors that influence business performance (Simoneaux & Stroud, 2011). Developed through extensive research and interviews
with Fortune 500 companies, the framework enables strategic alignment by recognizing an organization’s strengths, addressing weaknesses, seizing opportunities, and mitigating threats.

Strengths

Gurung Brothers Supermarket (GBS) is a dynamic Omaha-based importer, distributor, and retailer specializing in South Asian products. The Company also operates in e-commerce, restaurant, real estate, and healthcare services.
Key strengths include:

• Expertise in Asian merchandise and superior inventory quality
• Diverse services (money transfer, ATM, lottery, pharmacy, restaurant)
• Affordable pricing and expanding e-commerce presence
• Highly skilled and customer-focused workforce
• Regular employee training and continuous learning
• Prime location with over 115,000 vehicles passing daily
• Ownership of property, reducing overhead costs
• Minimal nearby competition and strong local demand for Asian cuisine.
  In 2019, GBS launched its e-commerce site (under development now), marking a significant step toward global accessibility and innovation.

Weaknesses

Despite strong performance, GBS faces several internal challenges:

• High VAT on imported goods leads to lower margins
• Limited product branding and financial resources
• Space constraints and insufficient parking for high traffic
• Rising inventory costs and wage expenses
• Lack of robust HR systems and English proficiency among staff
• Competition from major retailers like Walmart and No-Frills nearby While these weaknesses pose short-term hurdles, GBS continues to mitigate them through strategic expansion and staff development programs.

Opportunities

The digital era has opened vast possibilities for GBS:

• Expanding into global e-commerce markets and international delivery
• Adoption of advanced retail technologies to enhance competitiveness
• Relaxed government regulations and trade laws
• Market gap left by exiting competitors
• The Growing Popularity of Asian Cuisine in the US
• Strong business credit foundation for future investments.
  
  As technology continues to transform retail, GBS is positioning itself as a leader in hybrid retail operations, bridging physical and online shopping experiences.
  

Threats

No business is free from risk. GBS must stay vigilant against:

• Adverse or changing government policies (e.g., wage increases)
• Emerging local competitors
• Economic instability and market shrinkage
• Rapid technological shifts require constant adaptation
• Growing competition from large e-commerce and network marketing firms
  
  Past experiences have proven GBS’s resilience—when faced with nearby competition, strategic Pricing and loyalty programs helped reclaim market share and strengthen customer loyalty.
  

Conclusion

The SWOT analysis and financial performance review of Gurung Brothers Supermarket paint a clear picture: this is a company with strong fundamentals, disciplined management, and a forward-
looking strategy.
With a 15% sustainable growth rate, expanding ecommerce operations, and innovative retail Integration, GBS is well-positioned for continued success in an ever-changing global market. The Company remains committed to discovering new ways of thinking, innovating operations, and empowering both employees and customers—ensuring that Gurung Brothers Supermarket not only keeps pace with 21st-century retail trends but helps define them.

Introduction

Marketing is both an art and a science—it’s about understanding what customers truly want and designing products that meet those needs, at the right price, place, and time. A successful marketing strategy takes into account human psychology, economic behavior, and organizational dynamics. The core frameworks of marketing—5Cs (Customer, Company, Context,Collaboration, Competitors), STP (Segmentation, Targeting, Positioning), and 4Ps (Product, Price, Promotion, Place)—help guide businesses toward customer satisfaction and profitability. At Dr. Kumar Gurung Enterprises, the Marketing Manager has proposed a new marketing and production strategy focused on market segmentation, distribution channels, logistics, and supply chain management. This proposal also integrates quality management, operational improvements, and data-driven marketing research tools to strengthen the Company’s overall growth plan.

The Importance of Marketing

Modern marketing is not just about selling products—it’s about building and maintaining relationships. In today’s customer-empowered world, every Company must focus on understanding and connecting with its customers at a deeper level. Technology and data analytics now allow marketers to assess their impact with precision, turning marketing into an organization- wide philosophy centered on the customer. Before developing any strategy, a company must study its customers’ culture, language, wants, and lifestyle. Only then can it design meaningful offerings
that create value. Marketing today extends beyond goods and services—it includes ideas, events, organizations, experiences, and even individuals.
Market Segmentation
No two customers are the same. Their needs and preferences vary widely, and no single product can meet everyone’s needs. For companies like Dr. Kumar Gurung Enterprises, which cater to
diverse customer bases, segmentation is crucial. As Mousa and Zoubi (2011) explain, segmentation divides a large heterogeneous market into smaller, more homogeneous groups with shared characteristics. Dr. Kumar Gurung Enterprises’ approach, “a little bit of everything,” caters to local diversity, ensuring convenience and variety for all customer types.

Segmentation Approaches

• Demographic: Age, gender, income, family size.
• Geographic: Region, climate, population density.
• Psychographic: Personality, values, lifestyle.
• Behavioral: Purchase habits, brand loyalty, product usage.
  While mass marketing is cheaper, it’s less effective in meeting individual needs. One-to-one marketing, though costlier, ensures a personalized experience that increases satisfaction and retention.

Marketing Research Tools

To make informed decisions, Dr. Kumar Gurung Enterprises uses a range of research tools

• Cluster Analysis – for identifying customer segments
• Perceptual Mapping – for positioning products in consumers’ minds
• Focus Groups – for testing new concepts
• Conjoint Analysis – for evaluating product attributes
• Scanner Data – for pricing and brand-switching insights
• Surveys – for measuring customer satisfaction
• Network Analysis – for identifying influencers in buzz marketing
  The Company’s immediate plan is to conduct short customer surveys—either in person, online, or
  by phone—to measure satisfaction and gather insights for improvement.

Quality Management

Quality is the backbone of customer satisfaction and long-term profitability. It’s defined as the ability of a product or service to meet or exceed customer expectations consistently. High-quality
standards are essential not only for competitiveness but also for maintaining a strong reputation and fostering loyalty (Gajdzik & Sitko, 2014). At Dr. Kumar Gurung Enterprises, quality goes
beyond products—it’s a promise embedded in every customer interaction. From essential goods like salt to luxury items like gold, the Company also offers services such as money transfers,
ATMs, printing, phone recharges, and gift cards for high-volume buyers.

Continuous Improvement

Improving quality requires investing in better materials, training, and processes. While these efforts come with costs, they lead to higher customer satisfaction, stronger loyalty, and positive
word-of-mouth—all of which drive profitability. Research shows that retaining existing customers is far less costly than acquiring new ones. Companies that maintain high-quality standards tend to enjoy stronger financial performance and a larger market share.

Dimensions of Quality
For Products:
Performance, Features, Reliability, Durability, Confidence, Serviceability, Aesthetics, Brand
Reputation.
For Services:
Reliability, Responsiveness, Competence, Courtesy, Communication, Credibility, Security, Customer Understanding, and a Pleasant Environment. Customer expectations—shaped by
personal needs, reputation, and past experiences—define the accurate measure of quality.
Therefore, quality excellence means continuously improving both objective product standards and
perceived customer experience.

Conclusion

In the modern marketplace, success depends on how well a company aligns its marketing and operational strategies with customer needs. Dr. Kumar Gurung Enterprises exemplifies this
through its focus on strategic segmentation, continuous quality improvement, and customer-centered marketing research. By integrating marketing insights with operational excellence, the
The company not only strengthens its market position but also builds lasting relationships—turning satisfied customers into loyal advocates and loyal advocates into long-term profitability.

How Dr. Kumar Gurung Enterprises Builds a Strong Organizational Culture

In today’s fast changing business world, every company must learn to adapt or risk being left behind. At Dr. Kumar Gurung Enterprises, change isn’t something to fear it’s a natural part of our growth. Our journey shows how a strong organizational culture and flexible leadership can transform challenges into opportunities for success.

What Organizational Culture Really Means

Culture defines who we are as an organization. It shapes how we think, act, and treat one another. At Dr. Kumar Gurung Enterprises, our culture is built on mutual respect, ethical practices,
teamwork, and continuous learning. As the anthropologist Edward Tylor described long ago, culture is a “complex whole” that includes knowledge, beliefs, art, morals, and customs. We see this every day in how our team interacts sharing ideas, solving problems, and supporting each other across every level of the company. Culture isn’t static. It evolves as we discover new
solutions and face new challenges. When aspects of our culture no longer serve our goals, we always adapt to create a healthier and more productive workplace.

Why Change Is Essential

Business environments change constantly. New competitors emerge, customer expectations rise, technologies evolve, and the economy fluctuates. At Dr. Kumar Gurung Enterprises, we’ve faced all of these challenges crises, competition, customer feedback, and even internal morale issues. Instead of resisting, we use change as a catalyst to drive innovation and growth. Models like Kurt Lewin’s Force Field Theory and the Balanced Scorecard help us understand how to align internal improvements with external results. Change management isn’t about reacting—it’s about preparing, leading, and communicating effectively.

Leadership: The Heart of Transformation

Change doesn’t happen by accident, it’s led. Strong leadership is the engine behind every transformation at Dr. Kumar Gurung Enterprises. Leaders here don’t just set goals; they inspire
action. They help the team understand why change is happening and how everyone benefits from it. Through empathy, open communication, and active involvement, leaders foster trust and
minimize resistance. A positive attitude from leadership can make or break a change initiative. When leaders show confidence and commitment, employees follow with enthusiasm. We’ve seen
firsthand how motivation and inclusion lead to lasting results.

Leadership: The Heart of Transformation

Change doesn’t happen by accident it’s led. Strong leadership is the engine behind every transformation at Dr. Kumar Gurung Enterprises. Leaders here don’t just set goals; they inspire
action. They help the team understand why change is happening and how everyone benefits from it. Through empathy, open communication, and active involvement, leaders foster trust and
minimize resistance. A positive attitude from leadership can make or break a change initiative. When leaders show confidence and commitment, employees follow with enthusiasm. We’ve seen
firsthand how motivation and inclusion lead to lasting results.

Learning from Experience

When we acquired our current business, we faced significant cultural and structural challenges. Applying Kurt Lewin’s three-step model unfreezing, changing, and refreezing helped us reset our direction. By restructuring and redefining our company culture, performance improved dramatically our business is now performing ten times better than before. That transformation
reinforced our conviction that culture and leadership must evolve in tandem.
BUSINESS ADMINISTRATION IN THE 21ST CENTURY

As a leader, I’ve learned to be flexible a situational leader who adapts to the demands of each moment. Sometimes that means being a servant leader; other times, a transformational or charismatic one. What matters most is staying authentic, connected, and open to feedback.

The Human Side of Change

Change can be uncomfortable. Employees may fear losing income, job security, or familiar routines. At Dr. Kumar Gurung Enterprises, we acknowledge those fears and prioritize
communication and fairness. Not every change benefits everyone equally but through empathy and transparency, we make sure each person understands the purpose and long-term vision behind every decision.

The Takeaway: Culture + Leadership = Sustainable Growth

At Dr. Kumar Gurung Enterprises, we’ve learned that organizational success isn’t just about numbers; it’s about people. A strong culture and adaptive leadership enable a company to grow, innovate, and thrive, regardless of the challenges it faces. True transformation happens when every
A member of the organization embraces change not just because they have to, but because they believe in it.