Hispanic Entrepreneurs in the 2000s

Alberto Dávila is Professor of Economics and V.F. "Doc" and Gertrude Neuhaus Chair for Entrepreneurship at The University of Texas-Pan American. Marie T. Mora is Professor of Economics at The University of Texas-Pan American (UTPA). She serves on the Data Users Advisory Committee for the U.S. Bureau of Labor Statistics and the Board of the American Society of Hispanic Economists.

"This volume offers perhaps the first comprehensive, multidisciplinary analysis of the current state of Hispanic entrepreneurship in the U.S. . . . [Hispanic Entrepreneurs in the 2000s] would make an excellent reference on the shelf on the shelves of policy makers, practitioners, and academics interested in minority business development . . . Highly recommended. All readership levels."—B. P. Corrie, CHOICE "Davila and Mora tell us a cohesive economic story about Hispanic entrepreneurs, making an important contribution to the literature. They draw together data from disparate sources and provide an extensive analysis of micro data, a great resource for anyone interested in the topic."—Robert W. Fairlie , University of California, Santa Cruz "This book provides a wider purview of a market segment that is little understood, but of great importance. Not only does it have implications for policymaking, to which small business research is essential. It is also a testament to the importance of data collection that makes landmark studies like this possible." —Barbara J. Robles, Coauthor of The Color of Wealth

• Hispanic Entrepreneurs in the 2000s: An Economic Profile and Policy ImplicationsAuthor(s): Alberto Dávila and Marie T. MoraThis book provides an in-depth economic and policy analysis of Hispanic entrepreneurs in the first decade of the 2000s. This book captures a flavor of issues related to the business cycle, economic outcomes (such as employment, sales, and contributions to tax coffers), socio-demographic characteristics, access to financial capital, the use and importance of digital technology, and public procurement and other policies affecting Hispanic business owners in the early 2000s. One distinguishing feature of this book is that it provides a comprehensive empirical analysis of many of these issues for specific Hispanic populations, such as men versus women, immigrants versus natives, and across Hispanic sub-groups (Mexican Americans, Puerto Ricans, Cubans, and Salvadorans). The first decade of the 2000s witnessed the dramatic growth in the Hispanic population and the intensification of their entrepreneurial tendencies. If these demographic changes continue as the 2000s unfold, Hispanic entrepreneurship will become an increasingly vital component of American job creation and to the economic direction of the nation. 1A Macro View of Hispanic Self-Employment in the 2000sChapter abstract: This chapter provides an overview of the changing entrepreneurial tendencies among the Hispanic population in the first decade of the 2000s, which sets the stage for more detailed topics discussed later in the book. In particular, the chapter points out that the growing size of the Hispanic population as well as rising self-employment rates explain the recent growth in in the number of Hispanic-owned businesses. This chapter also presents information on the heterogeneity of the Hispanic population by highlighting the differences that existed across regions, industries, and ethnic subgroups. In addition, the chapter makes note of the importance of the business cycle when studying Hispanic entrepreneurship. 2Entrepreneurial Earnings of Hispanics in the 2000sChapter abstract: This chapter first outlines the self-employment "push-pull" framework and provides insight into the impact of an increasing entrepreneurial base on the talent and skills of Hispanic entrepreneurs. As part of the discussion, the chapter includes an analysis of the sales and profits of Hispanic-owned firms, as well as changes in the relative earnings of self-employed Hispanics during the first decade of the 2000s (particularly before and after the Great Recession). The issue of how entrepreneurial earnings changed for the largest Hispanic ethnic subgroups and for workers in the construction industry versus other industries is also explored. 3Hispanic Immigrant EntrepreneursChapter abstract: This chapter highlights that a large part of the story behind Hispanic entrepreneurship in the 2000s involved Hispanic immigrants. As part of the discussion, the chapter points out that Hispanic-immigrant entrepreneurs added significant value to the U.S. economy in first decade of the 2000s. It also analyzes the differences in sales between firms owned by foreign-born and U.S.-born Hispanics as well as how demographic characteristics (including ethnic origin, industry distributions, and the geographic concentrations of self-employed Hispanic immigrants) changed in the first decade of the 2000s. Issues related to self-selection are further considered, as are the contributions of Hispanic-immigrant-owned businesses to government coffers. 4Education and Hispanic EntrepreneursChapter abstract: Given their relatively low educational attainment, and given the recent increase in the number of Hispanic-owned businesses, the extent to which education matters for the business and earnings outcomes of Hispanic entrepreneurs has increasingly important implications for the future development of the United States. This chapter thus analyzes the relationship of education to sales of Hispanic-owned businesses, taking business owners' birthplace into account. The chapter further analyzes how the relationship between education and the earnings of Hispanic entrepreneurs changed during the Great Recession, including across the distribution of earnings, across Hispanic subgroups, and between natives and immigrants. The chapter concludes with an investigation into how education is related to entry into the self-employment sector. 5Hispanic Female EntrepreneursChapter abstract: Given that one-third of all Hispanic-owned businesses are owned by women, this chapter focuses on gender-related differences in business outcomes and self-employment earnings among Hispanic entrepreneurs. Hispanic female entrepreneurs appear to be at a relative disadvantage compared to their male counterparts with respect to a variety of outcomes (including sales, the likelihood of having paid-employees, the likelihood of being a microentrepreneur, and earnings). Nevertheless, through additional comparisons between foreign-born and U.S.-born entrepreneurs, the chapter points to the presence of stronger self-employment "pull" versus "push" conditions for female Hispanic natives than for immigrants. The chapter concludes with a discussion of policy implications. 6Strategic Issues for Hispanic Entrepreneurs—Credit AccessChapter abstract: This chapter addresses how Hispanic entrepreneurs fared with regards to accessing credit in the first decade of the 2000s. Hispanic entrepreneurs were more likely than their non-Hispanic counterparts to report the inability to acquire the financial capital they needed to expand or improve their operations; they also appeared to face other credit-access barriers in the form of relatively small loan amounts and high interest rates. In addition to considering the role of discrimination, this chapter discusses how these findings could relate to cultural forces, including how Hispanics seem to be relatively conservative in their credit demands and less likely to trust traditional methods of financing, such as bank loans. 7Strategic Issues for Hispanic Entrepreneurs—Technology UsageChapter abstract: This chapter explores whether Hispanic entrepreneurs use digital technology differently than their non-Hispanic counterparts. It also analyzes whether the usage of such technology related to business outcomes between Hispanic- and non-Hispanic-owned small firms. The findings are mixed. One dataset indicates the presence of a digital divide between Hispanic and non-Hispanic entrepreneurs with respect to having a website and conducting e-commerce, although differences in observable characteristics explained a considerable portion of this gap. However, an alternative dataset suggests that the digital divide that existed between Hispanic- and non-Hispanic-owned small businesses in the late 1990s had vanished by the mid-2000s. 8Current Policy Issues for Hispanic EntrepreneursChapter abstract: This chapter addresses a variety of policy issues pertaining to Hispanic entrepreneurship. It begins with a cursory data analysis that suggests the existence of potential untapped opportunities for Hispanic entrepreneurs because they either lack awareness about existing programs or are reluctant to use them. The chapter then discusses issues that have shaped (and might continue to shape) Hispanic entrepreneurship, from public policy and private-sector perspectives to changing demographic trends across the country. The chapter also provides a critical assessment of policy-related issues facing Hispanic entrepreneurs, such as those pertaining to government procurement, firm size, credit access (such as the "SBA 7(a)" loan program); education, immigration (including the "EB-5" visa program), and statistical discrimination. 9In ClosingChapter abstract: This chapter provides a summary of many of the key issues pertaining to Hispanic entrepreneurship raised throughout the book, including the business cycle, economic outcomes, socio-demographic characteristics, access to financial and physical capital, and policy and conceptual issues that Hispanic business owners faced in the first decade of this millennium. As discussed throughout the book, that decade witnessed dramatic growth in the Hispanic population and the intensification of entrepreneurial tendencies among Hispanics. If these demographic changes continue, Hispanic entrepreneurship will become an increasingly vital component of American job creation and the economic direction of the nation.