Women and Ethnic Entrpreneurs: A Comparative Review of Major Issues Linked to Success

ABSTRACT The diverse literature related to women and thnic entrepreneurs was reviewed to assess the critical factors that have contributed to entrepreneurial success. The analysis explore the differences in how these factors have been handled by women and other minority entrepreneurs. It provides insights into how small business operators, regardless of their ethnic identity, can improve their entrepreneurial efforts. INTRODUCTION In recent years women and ethnic minorities have entered entrepreneurial ventures at unprecedented rates (Wellner, 2002a). The number of women and ethnic entrepreneurs is growing four times faster than the national average for small businesses. Between 1992-1997, Hispanic-owned businesses increased 30 percent; African American-owned, 26 percent; Asianowned, 30 percent; and women-owned, 16 percent. However, the number of women-owned businesses has more than doubled since 1987, and today they represent 9.1 million (full or part owners) of the 24 million U.S. small businesses (SBA Office of Advocacy, 2002). These trends are expected to continue because the ethnic population continues to grow, minorities are getting more business experience, a larger number of minority "business assistance" programs exist, and there has been a cultural shift that promotes entrepreneurship (Robb, 2002; Wellner, 2002a). Despite these positive trends, developing and operating successful businesses is more problematic for certain minority groups, especially African Americans and women, because they face a complex set of problems that are not fully understood (Teixeira, 2001). In addition, many studies show that certain minority groups have consistently performed better than others in entrepreneurship (e.g., Bates, 1989; Light, 1984; Robb 2002). Researchers have investigated a myriad of variables related to minority entrepreneurship. The cumulative research in this area is very large, and the topics are varied, often with an interdisciplinary approach. The purpose of this paper is to summarize the research on ethnic and women minorities and provide prescriptive recommendations to improve the success of women and ethnic entrepreneurs. BACKGROUND Minority and Ethnic Entrepreneurs The entrepreneurship literature related to minority groups largely defines these groups in terms of ethnicity or gender. An ethnic group is defined as a segment of a larger society whose members are thought, by themselves and/or others, to share a common origin, and to participate in a set of activities based on their origin and culture (Iyer & Shapiro, 1999). The major ethnic business groups covered in this research are African Americans, Hispanics, and Asians.1 These groups are designated as minorities because each represents a small segment (less than 15 percent) of the total U.S. population. However, their businesses represent a disproportionate percent of the aggregate number of U.S. businesses. As an example, African Americans and Hispanics each represent 13 percent of the population but only 4.0 percent and 5.6 percent, respectively, of all U.S. businesses. Asian entrepreneurs have attained a much higher level of success relative to the other ethnic groups since they own 4.4 percent of all businesses but represent 3.5 percent of the U.S. population (SBA, Office of Advocacy, 2002). Asians are more successful at running their businesses as well. Their sales receipts accounted for more than half (51.9 percent) of the $591 billion generated by minority entrepreneurs in 1997 (Wellner, 2002 a). The number of female-owned businesses has exploded within the past 20 years due to the rise in the number of women entering the workforce (Coleman, 2002). However, businesses owned by females still constitute a disproportionately smaller part of the total business community. Importantly, a large number of female business owners are ethnic minorities, and a sizeable percentage of these businesses are co-owned with a male (mostly a spouse). …