Hispanic Immigrant Entrepreneurs in the Las Vegas Metropolitan Area: Motivations for Entry into and Outcomes of Self-Employment*

Introduction Census data show that the Hispanic minority is underrepresented among business owners in North America. In 2002, Hispanics represented 13.3 percent of the U.S. population (Ramirez and De la Cruz 2003) but comprised only 4 percent of business owners (Bergman 2005), holding the lowest self-employment rates among minority-owned businesses, ahead only of African Americans (Fairlie 2004). In Nevada, data expose an even larger gap: only 5.1 percent of firms are owned by Hispanic individuals, whereas Hispanics represent close to 20 percent of the population in this state (Salyers and Strang 2001). This imbalance spurred our interest in, and subsequent investigation of, the motivations of Hispanics to enter business ownership. Our study was exploratory in nature and focused on foreign-born Hispanic business owners in the Las Vegas metropolitan area. Through structured, face-to-face interviews with foreign-born Hispanic entrepreneurs, we investigated two issues. First, we inquired about the motivations to enter business ownership. Are Hispanic immigrants attracted toward entrepreneurship because of the positive outcomes they associate with it, or do they see entrepreneurship as the best option for them given limited opportunities in the primary job sector? Second, we looked at various business practices, including activities engaged in prior to business start-up (e.g., preparation of a business plan, selection of legal definition, and selection of an accountant) and ongoing practices once the business was running (e.g., monthly budgeting, supplier payments, and advertising), in order to assess their impact on business viability. How do Hispanic immigrants manage their businesses, and what impact does this have on the viability of their enterprises? In the absence of profitability data, we assessed viability by contacting the business owners interviewed approximately one year after the initial interviews were conducted so as to determine which of the initially interviewed businesses were still operating. The choice to focus on foreign-born Hispanics rather than Hispanics in general is attributed to demographic differences between the two groups and their potential relevance to our research questions. Native and foreign-born Hispanics may have different motivations to enter self-employment; for example, native-born individuals typically do not have to overcome the challenges of migration, which often involves loss of human and social capital gained abroad, such as foreign-earned credentials and an individual "network of contacts and other business associates" (Mata and Pendakur 1999, p. 380). English proficiency is also less likely to be a barrier for gaining employment in the primary labor market for native-born individuals when compared with foreign-born individuals. Census (2000) data indicate that among native-born Hispanics in Nevada, only 8.8 percent spoke English "not well" or "not at all" compared with 45.8 percent of foreign-born Hispanics. Finally, there is some evidence that when compared with native-born Hispanics, foreign-born Hispanics are more likely to enter business ownership (Mata and Pendakur 1999; Borjas 1980) and be concentrated in different types of businesses (Borjas 1980). In the following, first we discuss the different motivations to enter business ownership identified in past studies, both contextual/environmental as well as individual factors. Second, we describe several business practices (e.g., planning, budgeting, and financing) and their importance to business viability. Third, we present our methodology as well as our findings and compare them with previous studies, taking into consideration the context in which we conducted our study. We conclude by describing the limitations of our study, offering some recommendations, and identifying areas for future research. Motivations to Enter Self-Employment In a 2003 public address, Secretary of Labor Elaine E. …