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Arab entrepreneurs in Israel form part of a traditional, yet peripheral, ethnic minority attempting to integrate into Israel's larger economy. This study, based on extensive fieldwork, focuses on the obstacles that these Arab entrepreneurs and new industrialists must overcome in their development towards industrialization. The research exposes a highly flexible entrepreneurial culture making use of a limited set of opportunities and resources. The work makes a strong contribution to comparative cross-cultural research and theoretical formulations on issues of ethnic entrepreneurship.