Academic journal article Journal of Small Business Management

Measuring Ethnic Community Involvement: Development and Initial Testing of an Index

Academic journal article Journal of Small Business Management

Measuring Ethnic Community Involvement: Development and Initial Testing of an Index

Article excerpt

This paper builds on the work of Chaganti and Greene, who distinguish between ethnic minority entrepreneurs/small business owners who are very involved with their ethnic community and those who are not. We extend their work by developing an Index of Ethnic Community Involvement based not only on personal but also business characteristics. We utilize a large sample size (698 interviews with entrepreneurs), drawn from five ethnic groups, and develop a valid and reliable (0.69) Index of Ethnic Involvement (IEI) with a strong emphasis on social capital theory. Our initial analysis shows the IEI predicts some personal and business characteristics. Future development will include building regression models to predict business outcomes. The IEI, when fully developed, promises to be useful for targeting assistance, education and training programs, and policy initiatives for entrepreneurs and small business owners according to the level of ethnic community involvement.

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In North America and other countries with high current or historical immigration levels, it is important to consider the effect of ethnicity in relation to current and potential entrepreneurs and small business owners. A recent article in the Journal of Small Business Management discussed the confusion around the terms ethnic entrepreneur, ethnic minority entrepreneur, and immigrant entrepreneur. The authors (Chaganti and Greene 2002) then provided an insightful and novel measure by which we could enhance our research about ethnic entrepreneurs/small business owners. They utilized personal characteristics to measure the degree of ethnic community involvement, indicating that the issues relevant to an ethnic minority entrepreneur with high levels of community involvement would be very different from those with a lower level of involvement. Building on their work, we have developed an Index of Ethnic Involvement (IEI) and performed initial testing with a large sample size of ethnic entrepreneurs.

Several theoretical perspectives have been adopted for studying ethnic entrepreneurs. Recent reviews of ethnic entrepreneurship have focused to some extent on social capital theory. For example, Butler and Greene's (1997) review of ethnic entrepreneurship highlighted "the importance of a community dimension inherent in the business creation process" and the "significant contributions of community resources to the entrepreneurial activities of group members" (p. 281). Deakins (1999) concluded from his review that networking was vital to minority business success, that the diversity of ethnic minority enterprises has been overlooked, and that there has been too little consideration of the special circumstances and support necessary for ethnic business owners, particularly for those entrepreneurs who wish to move out of the ethnic market into the mainstream. Rath and Kloosterman (1999) were highly critical in their review on the basis that studies seemed largely driven by government funding and mainly concerned policy directives, and also that many had little theoretical value. They recommended that future studies focus on social capital and ethnic networks, with international comparisons of ethnic groups. These reviews of the literature from the United Kingdom (Deakins 1999), the Netherlands (Rath and Kloosterman 1999), and the United States (Butler and Greene 1997) all point to the limitations of current knowledge, the lack of currently viable theoretical models, and the necessity for future theoretically grounded research.

Ethnic entrepreneurship research studies are generally based on case studies, surveys with small samples, or utilization of secondary databases (for example, census data). Obtaining respondent cooperation is particularly difficult as many ethnic group members, especially visible minorities, may be immigrants and not predisposed to research participation, particularly survey research. The large number of different ethnic groups dictates that it will be a considerable time before we amass a comprehensive literature on entrepreneurs from the various ethnic groups. …

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