Minorities More Likely to Attempt to Start a Business than Whites
`WASHINGTON, D.C., September 24, 2002 Some 10 million American adults are involved in the process of starting nearly six million potential new businesses at any one time with African Americans 50 percent more likely to start a business than whites, according to a new report that answers who is involved in start-up ventures in the United States.
WASHINGTON, D.C., September 24, 2002 Some 10 million American adults are involved in the process of starting nearly six million potential new businesses at any one time with African Americans 50 percent more likely to start a business than whites, according to a new report that answers who is involved in start-up ventures in the United States. The Panel Study of Entrepreneurial Dynamics (PSED) finds that African American men with graduate experience between the ages of 25-35 are the most actively engaged population starting new businesses in the U.S. today. Hispanic men are 20 percent more likely than white men to be involved with start-up ventures. For more information about the study and to download the report, visit: http://projects.isr.umich.edu/PSED, or http:www.emkf.org.Funded with grants from the Ewing Marion Kauffman Foundation, the National Science Foundation and 33 member institutions, findings of the study will be announced at the September 25, 2002 opening of the U.S. Minority Business Development Agency's national Minority Enterprise Development (MED) Week conference in Washington, D.C. The PSED is a national sample of 64, 622 U.S. households, which identified a panel of 830 nascent entrepreneurs and followed their efforts to pursue business starts-up over a two-year period. The ongoing study tracks emerging entrepreneurs as they progress through the entrepreneurial process and reveals that attempts at new business formation are more widespread than previously disclosed and involve all racial and ethnic groups. "The creation of a new firm is more widespread in the U.S. than getting married or the birth of a baby," said Larry Cox, Director of Programmatic Research at the Kauffman Foundation. "The next successful entrepreneur is as likely to be the person next door as the scientist tinkering in his or her lab."Among the key findings:
Approximately 10.1 million adults in the U.S. are attempting to create a new business at any given time. With nearly one half of all new ventures started by teams of people, this represents about 5.6 million potential new businesses. Men are twice as likely to be in the process of starting new businesses as women; young men ages 25-34 are the most active. African American women have a higher propensity for entrepreneurship than white or Hispanic women, who are about equally as likely to attempt to start a business. Education significantly predicts nascent entrepreneurship, particularly for African Americans and Hispanics. Approximately 26 of every 100 African American men and 20 of every 100 Hispanic men with graduate education experience report efforts to start a new business. This compares to 10 of every 100 white men with graduate education experience. The impact of urban context varies for whites, African Americans and Hispanics. For white and African American men and women, the tendency to initiate start-up efforts is greatest among those living in more urban contexts. But for Hispanic men and women, the highest levels of activity are among those in the least urban contexts.The study seeks to answer four questions:
Who is involved in starting businesses in the U. S.? How do they go about the process of starting companies? Which of these business start-up efforts are likely to result in new firms? Why are some of these business start-up efforts successful in creating high-growth firms?Serving as principal researchers on the undertaking are:
Nancy M. Carter, Graduate School of Business, University of St. Thomas William B. Gartner, Marshall School of Business, University of Southern California Patricia G. Greene, Henry W. Bloch School of Business and Public Administration, University of Missouri - Kansas City Paul D. Reynolds, Blank Center for Entrepreneurial Studies, Babson CollegeThe researchers led over 120 scholars in the development of the study.Carter, Gartner, Greene and Reynolds conclude that there is no one group or type of individual not engaged in new business formation. The results show education, income and location significantly predicts nascent entrepreneurship, and ethnicity, age and gender impact who are actively engaged in starting new ventures in the U.S.
The PSED offers widespread implications for public policy, education and economic development, as well as individual wealth creation, they say. The Ewing Marion Kauffman Foundation and its partners look beyond need to identify and develop pivotal opportunities in Kansas City and nationwide that help create successful businesses and improve the education of children. Established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman, the Kauffman Foundation works to advance entrepreneurship by reaching individuals of all ages through the delivery of entrepreneurship education and development, and the promotion of an entrepreneurial environment. For more information about the Kauffman Foundation, visit http:www.emkf.org.
