Characteristics of the Minority Entrepreneur

Abstract

CHARACTERISTICS OF THE MINORITY ENTREPRENEUR The prospect of being your own boss, running your own business and creating your own ideas is a glamorous one to many people; however, this endeavor involves considerable risk, hard work, and sacrifice. For the minority business owner, the obstacles and risks are perhaps greater than for other entrepreneurs and the chances of success are lower. It is estimated that over 1.4 million new businesses will be created in 1986. More than 50 percent of these businesses will fail within the first two years of operation. For the minority-owned business, the failure rate will be much higher, due primarily to a lack of training and experience in business management. In spite of these difficulties, the number of minority entrepreneurs is increasing. This increase reflects the difficulty many middle management-level minorities have in entering senior-level executive positions. Bureau of the Census statistics indicate that between 1973 and 1983 the number of blacks self-employed in occupations other than agriculture rose by 51 percent to 506,000 individuals, while the number of self-employed whites rose by only 29 percent. This trend toward increasing minority self-employment is continuing. The purpose of the survey research conducted in the present study was to document some of the characteristics and skills of minority entrepreneurs. BACKGROUND The pioneering study of both minority and female-owned firms conducted in 1975 by the U.S. Commission on Civil Rights showed that these owners encountered problems of staggering proportions in obtaining the information about federal, state, and local government contracting opportunities that was necessary to submit timely bids. In addition to having trouble obtaining the working capital necessary for effective marketing and bidding, these groups also encountered a great deal of skepticism regarding their ability to perform adequately on government contracts. The most frequent contract areas were: wholesale, retail, and service classifications, areas least likely for purchases by the federal government. One of the first studies to examine the characteristics of successful entrepreneurs included 36 white and 24 black business owners. The white males in the sample had been in business longer, had fewer divorces, and had more innovative ideas than their black counterparts. These differences were, however, attributed to socioeconomic, rather than racial efforts. The characteristics of minority entrepreneurs were first explored in a study of 204 male and 16 female business owners. No significant relationship was found between the sex of the respondent and the status of the firm, the industry in which the firm was positioned, the size of the firm, the origin and the status of the firm, or the age of the firm. A study of 122 black, white, Hispanic, and American Indian women entrepreneurs found that the responses of both minority and non-minority women entrepreneurs differed significantly from those of women in the general population on tests of achievement, autonomy, aggression, conformity, independence, benevolence, and leadership. Differences were also found between minority and non-minority women entrepreneurs, with minority entrepreneurs reporting that they started their businesses at a later age than the non-minority women. While non-minority women entrepreneurs scored higher on ratings of need for achievement and independence, minority women appeared to place greater value on conformity and benevolence. Research on business ownership by minority groups indicated that while blacks had the lowest ownership rate, they had slightly higher growth rates that the other minority groups. Hispanics had the second highest rates of ownership among minorities along with the highest rate of increase in ownership. Asians had the highest ownership rates but the lowest rate of increase in number of businesses. …

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