Participation of Minority- and Women-Owned Businesses in Programs Designed to Expand Their Access to Government Contracts: A Preliminary Examination

Article excerpt

ABSTRACT

The study examines how businesses owned by members of different racioethnic groups fared in a local governmental agency's Disadvantaged Business Enterprise (DBF) program. Analysis of data on contract awards to DBE firms from 1985 to 1991 revealed differences in how the various racioethnic groups fared, both over time and by type of products and services provided. These differences would not have emerged if all groups had been treated as one "disadvantaged" group. Inappropriate aggregation of data leads to incomplete knowledge about the effectiveness of DBE programs, and may lead to setting overall goals that do not equitably benefit all the racioethnic groups.

INTRODUCTION

Interest in research on minority-owned businesses was prompted by the Civil Rights Movement. According to Krohn and Rogers (1977), The Report of the National Advisory Commission on Civil Disorders, published in 1968, was one of the first national studies to point out the need to encourage the establishment and expansion of African-American-owned businesses. Early research on minority-owned businesses really meant research on businesses owned by African-Americans; the terms "minority" and "black" were used synonymously. A typical example of this is an article by Dougherty (1978) entitled "A Study of Attitudinal Factors in Consulting Relationships with Mmorify-owned Small Business," which reported on a study of 81 black businesses (emphasis added).

Later research did begin to look at the experiences of members of other racioethnic groups in owning and operating businesses, primarily Hispanic and Asian-American (Nordlinger, 1981; Ravel, 1983; Triana, Welsch, & Young, 1984). But almost all studies that included multiple racioethnic groups tended to treat "minorities" as a homogeneous group that needed to be understood (Dadzie & Cho, 1989; DeCarlo & Lyons, 1979), or that had characteristics or experiences which were expected to differ systematically from those of the majority group (Hisrich & Brush, 1986; Scott, 1983). Some of the studies did not even report the ethnic makeup of their samples (Bates & Furino, 1985; Scott, 1983). Others carefully selected a stratified sample to assure proportionate representation of various racial or ethnic groups (Dadzie & Cho, 1989), or compared the ethnic breakdown of their sample with the distribution nationally to determine if it was representative (DeCarlo & Lyons, 1979), but then went on to collapse the groups and treat them as homogeneous in their analyses. This practice was criticized by the U. S. Small Business Administration (1988):

Clearly, the entrepreneurial characteristics and performance of various minority groups and subgroups are too diverse to combine them in one "minority" category. The widely ranging levels of business ownership and business formation rates, and the underlying human, financial, and social causes of these differences are better understood when the aggregate data are separated into the various components, (p. 166).

More recently, researchers have at least begun to check to see if there are any significant demographic differences in the racioethnic groups comprising their samples (Enz, Dollinger, & Daily, 1990), but there still are very few studies that look at differences among entrepreneurs who are members of different racioethnic groups (Feldman, Koberg, and Dean, 1991; Hollingsworth & Hand, 1976; U. S. Small Business Administration, 1988). The result is that we know little about the entrepreneurial characteristics of, and the performance of businesses owned by, members of racially and ethnically diverse groups. We know a little more about women-owned businesses (Kalleberg & Leicht, 1991; U. S. Small Business Administration, 1988)-at least those owned by white women-but we know almost nothing about how they compare to those owned by members of ethnic minority groups.

We also know little about the experience of various minority-owned businesses in contracting with local governments. …