Refugees are more likely than native citizens to begin entrepreneurial ventures in their adopted countries, either by choice or because they have few other options. A new study offers novel insight into how refugees from common backgrounds end up adopting very different approaches to running their businesses, by focusing on refugees who defected from North Korea and started their own ventures in South Korea.

“Focusing on North Korean defectors (NKDs) allowed us to explore processes that are harder to see in other countries” says Erin Powell, co-author of a paper on the study and a professor of entrepreneurship in North Carolina State University’s Poole College of Management. “NKDs speak the same language, have similar cultural backgrounds and gain legal citizenship in South Korea through a structured process. But like refugee entrepreneurs in other countries, they have few social ties and are viewed as members of a disparaged ‘out-group’ by many in their new home. Based on preliminary field work, we wondered how the NKD entrepreneurs responded to their out-group status.”

Researchers conducted a 27-month field study in South Korea of 23 NKD business founders, with an in-depth focus on 13 of the founders. The study involved multiple interviews and spending time with the entrepreneurs and their employees both in their businesses and in public settings as well as analyzing social media data.

Study participants responded to their out-group status in widely varied ways, particularly with regard to three important features of their businesses: the overall mission of their business, how they branded and positioned it, and who they hired (or avoided hiring).

“For example,” Powell explained, “some NKD founders resisted hiring NKD employees; some would only hire NKD employees; and some made a concerted effort to hire both South Korean and NKD employees.

“The discovery that allowed us to make sense of this,” Powell emphasizes, “is that founders asserted entrepreneurial agency as they responded to the negative stereotypes associated with NKDs in South Korea. Study participants either accepted the negative stereotype as accurate, or they rejected it. And they either accepted that they were part of the out-group, or they rejected that. These decisions effectively informed how the founders viewed themselves, and that sense of identity informed who they would become through entrepreneurship.”

For example, NKDs who accepted the negative stereotype, but rejected being part of the out-group, would take active steps to conceal their personal background and would avoid hiring other NKDs. At the other end of the spectrum, NKDs who rejected the negative stereotype and accepted being part of the out-group, were open about their origins and would hire NKD employees.

“This research enriches understanding of refugee entrepreneurship by uncovering an important source of entrepreneurial agency,” says Powell. “Many of the NKD founders saw their new home not just in terms of what it was, but in terms of what it could be and how they could contribute to its future as they built their own futures through entrepreneurship.

“Our paper is a useful addition to research demonstrating the importance of identity dynamics and agency in entrepreneurship under conditions of adversity and resource constraint,” according to Powell. “There is a lot we still need to learn about how entrepreneurs are sometimes able to accomplish things that surprise outside observers as they work to become who they want to be.”

The paper, “Who Will I Be? Refugee Entrepreneurship and Founder Identity,” is published in the Journal of Business Venturing. First author of the paper is Eunki Ro of Kyonggi University. The paper was co-authored by Ted Baker of Rutgers University.