Long-Term Entrepreneurship Patterns: A National Study of Black and White Female Entry and Stayer Status Differences

Over the past two decades there has been an increasing number of women who have started their own businesses and are self-employed. Data from the U.S. Bureau of Labor Statistics indicate that in 1969 there were 1.2 million self-employed women. This figure roughly doubled by 1982, and by 1991 the figure has reached over 3 million (U.S. Department of Labor 1969, 1982, and 1991). Furthermore, the U.S. Bureau of the Census indicates that over the same time period the number of female entrepreneurs has increased roughly five times faster than that of the number of self-employed men and more than three times as fast as women who receive wages and salaries (U.S. Department of Commerce 1987). These emerging trends clearly underscore the increasing importance of gaining insight into the nature and dynamics of the careers of female entrepreneurs. While research attempts have been made to these ends, they have considerable limitations. Virtually all female entrepreneurship studies to date have been limited in one or more of the following ways: the use of convenience samples, small sample sizes, samples limited to specific geographic areas, lack of a control group or other bases of comparison, and perhaps most importantly the use of cross-sectional data where respondents are observed at a single point in time rather than over time (Neider 1987; Pellegrino and Reece 1982; Longstreth, Stafford, and Mauldin 1987; Mescon and Stevens 1982; Cuba, Dezenzo, and Anish 1983; Sexton and Kent 1981; Waddell 1983). Such studies lack generalizability. Moreover, they fail to identify the dynamics of female entrepreneurship. They do not permit an assessment of individual patterns of entry into, and staying in or, conversely, exiting from, entrepreneurship over time. Thus, it is impossible to identify to what extent self-employees in a given year are comprised of new and continuing entrepreneurs. The importance of gaining insight into the dynamics of entrepreneurship in terms of entry and stayer/exit status has been echoed by many. For example, a recent U.S. government report on small business states, "Most data on establishment change in the economy are presented in terms of net change," that is, presentation of overall changes in self-employment rates, while ignoring the relative contribution of new entrants and stayers. The report states further ". the gross flow of establishment births and deaths over any period, produce a much more active and dynamic economy than normally described. Attention to the relatively large size of the gross flows may provide some insight on appropriate public policy in support of small business" (U.S. Small Business Administration 1985). Only when self-employment rates are considered in terms of gross flows can the self-employment dynamics of entry into and exit from entrepreneurship be addressed. The value of adopting a dynamic gross flow approach is clearly relevant when examining entrepreneurship patterns of the overall population, as when examining that of specific population strata. To begin to gain insight into the difference between black and white women's entrepreneurship rate patterns over time, the present study adopts a dynamic gross flow approach. Toward this end, this study uses longitudinal data from the National Longitudinal Survey of Labor Market Experience (NLSLME) which follows a nationally representative sample of women from 1967 through 1989. To date virtually no study has exclusively focused on black female entrepreneurs, let alone directly compared their experience with that of their white counterparts. Of the few minority entrepreneurship studies undertaken, most have combined men and women into the same sample or examined only men. Therefore, in addition to the array of limitations of entrepreneurship studies in general (use of convenience samples, small sample sizes, etc.), identification of the nature and dynamics of black female entrepreneurs is further handicapped. …