Frontiers of Entrepreneurship Research
1997 Edition

SUMMARIES

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FACTORS INHIBITING ETHNIC PARTICIPATION IN ENTREPRENEURIAL PROCESS

1Sammis B. White
2Paul D. Reynolds

1Department of Urban Planning
University of Wisconsin-Milwaukee
P. O. Box 413
Milwaukee, WI  53201-0413

2Babson College
Babson Park, MA 02157

Telephone: 1414-229-5916, 2617-239-5608
Fax: 1414-229-3884, 2617-239-4178

Principal Topics

The principal question addressed is whether there are differences among ethnic groups in participation in the entrepreneurial process.  A related question is if there are different rates of participation, are these differences due to factors which have created an "unfair playing field" or do they relate to the characteristics of the ethnic populations?  We examine whether there are specific characteristics which can inhibit participation in entrepreneurship, and once identified, we explore the relative roles of the presence of these inhibitors with regard to the participation rates in the various stages of entrepreneurship of the five different ethnic groups.
 
Method

Using data from the Wisconsin longitudinal study, we identify specific inhibitors and then proceed to examine their presence among the five largest ethnic groups in the state to determine their influence on entrepreneurial participation at the various stages of new firm development. The data were gathered from a survey of the general population in the state to locate nascent entrepreneurs, those individuals taking steps to start a new firm.  The initial survey had a weighted n of 688 and an actual n of 1269 persons.  It included 140 nascent and discouraged (nascent entrepreneurs who have giving up trying) entrepreneurs. The samples of each ethnic group participating in the early stages of entrepreneurship contain over 100 persons  for each group.

Major Findings

Among the findings are the following:  1) the differences in socio-demographic characteristics of the minority groups are just as striking as their differences from the white majority;  2) there are no statistically  significant differences among the five groups on their involvement in the four stages of entrepreneurial activity;  3) there are, however, inhibiting factors-factors which, if absent,  may eliminate a person from active participation in starting a new firm;  4) Inhibiting factors include having less than a high school degree, an annual income below $10,000, having lived in their county of residence for less than five years, and having a small network of friends and family;  5) among those with one to four inhibitors, only 1% are involved in a new-firm star-up compared to 7% among those with none of these inhibitors (statistically significant); 6) the results vary by factor and ethnic group: when the five ethnic groups are considered in terms of the presence of inhibiting factors-there were major differences; 7) however, among adults in four of five ethnic groups that did not have an inhibiting factor, there was no evidence that non-whites were either at a disadvantage in the entrepreneurial process or pursued new firm start-ups in a distinctive manner.

Implications

Two of the inhibitors to entrepreneurial participation are not amenable to government influence.  The other two-lack of a basic education and a shortage of money seem more suited to government programs.

   

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