Minority Entrepreneurship: Trends and Explanations

Abstract

In the United States, the rate at which minorities create new businesses varies by specific populations. While large-scalenational data collection efforts, including the Survey of Minority Owned Businesses, have attempted to illuminate the phenomenon of minority entrepreneurship, they have revealed little about the startup process ofminority entrepreneurs, mostly because they have focused on established businesses rather than on new businesses and individual owners. The National Panel Study of Entrepreneurial Dynamics (PSED) from the U.S.Census Bureau, however, actually does allow for comparison of startup effortsamong major age, gender, and ethnic groups. The data set, which wascollected between July 1998 and January 2000, involved the participation of 64,622 nascent entrepreneurs.The data suggest that ethnic background hasa major impact on the prevalence of business startups. African Americansand Hispanic Americans are as active in business startup efforts (if not moreso) as the White majority. Success rates, however, are another matter: African Americans are lesslikely than Whites and Hispanic Americans to complete the start-up process witha going concern. A number of disciplinary perspectives may be used to account for the findings from the PSED. One such perspective involves the four "primitive" drivers of organizational process. The dialectical driver, for example, recognizes the dual identity of the minority entrepreneur as business creator and societally determined member of a minority group. Additional information about the PSED design, data collection, processmodel, and preliminary findings is included. (SAA)

Keywords: Nascent entrepreneurs, Panel Study of Entrepreneurial Dynamics (PSED), Startups, Survival rates, African Americans, Minority firms, Ethnic & racial groups, Hispanic Americans, Minorities