Photo by: Jeremy Brooks | Flickr | Creative Commons
In collaboration with the Latino Economic Development Center (LEDC) the Center has launched an in-depth analysis of Latino entrepreneurship in the DC metro area. The project is directed by AU Kogod School of Business Professor Barbara Bird and George Washington School of Business Professor Ayman El Tarabishy. While there is firm evidence to suggest that healthy minority-owned enterprises are a significant source of employment and community development, comparatively little attention has been given to the specific challenges facing business ventures undertaken by Latinos. Through its work with clients in metropolitan Washington, LEDC has identified a number of pressing challenges, including obstacles that Latino entrepreneurs encounter as they strive to envision the evolution of their businesses over time.
Through extensive field work, this study intends to increase our understanding of Latino entrepreneurship, the motivations and expectations of Latinos in business, possible explanations for uneven success of their firms, and the reasons why entrepreneurs may differ in their expectations.
Considering the heterogeneity of Latino communities, in Washington and beyond, the research engages entrepreneurs from varied backgrounds, as well as numerous economic sectors. Survey and ethnographic data are already revealing valuable information about decision making in both established Latino firms and among individuals contemplating launching new businesses which will enable greater understanding into their motivations, the main problems they experience, and the mechanisms they deploy to maximize their prospects for success.
These findings, which will serve as a basis for scholarly articles and further research, will 1) shed light on the vision, skills and financial tools of Latino entrepreneurs in the DC area, 2) help explain differences and differentiation among entrepreneurs and how these variables influence success and business expectations, 3) create a foundation for “scaling up” our research to encompass the circumstances experienced by Latino entrepreneurs in other regions of the country.
In the first phase of the study, the research team conducted open-ended interviews of a sample of 30 Central and South American entrepreneurs in the DC metro area and identified significant differences in the planning behavior of entrepreneurs by country of origin. Specifically, the team found consistent evidence that South American entrepreneurs (from Colombia, Peru and Bolivia) were significantly more likely to engage in both short and long-term planning compared to their Central American counterparts (from El Salvador, Guatemala, and Honduras). Download the full report.
Preliminary findings were presented and discussed in the panel entitled “Latino Immigrant Entrepreneurs: Future Time Perspectives” at the Third Annual International Council for Small Business (ICSB-GWU), "Global Entrepreneurship: The Latest Research on Business Creation," which was held October 11-13, 2012 at The George Washington University. More information is available at: http://www.icsbgw.org/program.asp
A second phase of the project has been initiated with the aim of increasing the number of interviews to 150 and diversifying the sample to include Mexican immigrants. Interviews conducted in phase one were performed over the phone and in person. Phase two will also include online surveys. Collecting data from a larger sample of entrepreneurs and on a larger number of variables will allow us to expand upon the research conducted in Phase 1 in a number of ways. First, business outcomes will be examined such as the number of employees, revenues, and growth, in addition to the short- and long-term planning practices of entrepreneurs. Second, the expanded scope of the study will allow us to gather data on entrepreneurs from more Latino sub-groups. This will allow the researchers to identify the similarities and differences between these sub-groups while controlling for key intervening factors, such as socioeconomic status and social, human, and economic capital endowments.
The expected scholarly contribution of this phase will be to test a series of theory-based hypotheses gleaned from the literature on ethnic entrepreneurship among understudied Latino sub-groups in a new destination city. We begin with five guiding hypotheses that can be tested through analysis of data to be gathered over the course of six months of research. First, in the case of immigrant entrepreneurs, the motivation for migration will impact the goals of a new venture. Second, social capital may substitute for human capital among Latino entrepreneurs, particularly when there are high concentrations of co-ethnics and opportunities to serve an ethnic niche market. However, reliance on within-group social capital may place a ceiling on potential future growth and expansion to broader markets. Third, the greater the combination of social and human capital, the greater the likelihood of start up, survival, and growth. Fourth, future time perspective will have a positive relationship to short and long term planning behaviors. Fifth, planning behaviors (e.g., targeting customers, seeking resources, preparing communications) are cumulative and positively impact venture survival and growth.