Academic journal article International Journal of Entrepreneurship

Necessity Entrepreneurship: A Latin American Study

Academic journal article International Journal of Entrepreneurship

Necessity Entrepreneurship: A Latin American Study

Article excerpt

INTRODUCTION

In 2007, 20.7 percent of all the businesses in the state of Texas were owned by Hispanic entrepreneurs (Echeverri-Carroll & Kellison, 2012). There was a 40.2 percent increase (in five years) in the number of Hispanic owned businesses in Texas. The figure went from 319,340 in 2002 to 447,589 in 2007 (Echeverri-Carrol & Kellison, 2012). The recent US census revealed that the Hispanic-American population in the United States will grow three times faster than any other ethnic group over the next 20 years (Roberts, 2013). This rapid growth will very likely affect the American economy as immigrants are nearly twice as likely to create new businesses (Herman & Smith, 2010). The causes for this early entrepreneurship activity include both a home country culture which supports entrepreneurship activity and conditions in the United States which both encourage and necessitate the creation of new ventures. This study will examine both the causes for immigrant entrepreneurship activities and the barriers, especially the institutional barriers, faced by immigrants from Latin American countries.

ENTREPRENEURSHIP CULTURE WITHIN LATIN AMERICA

It is well established that entrepreneurship is the engine of economic growth in developed and developing economies (Reynolds, 1997; Schumpeter, 1934). Studies performed by the Global Entrepreneurship Monitor (GEM) have revealed that Latin America has especially high levels of entrepreneurial activity (Larroulet & Couyoumdjian, 2009). When it comes to entrepreneurship rates, Latin America is the second highest region in the world, exceeding those of the European Union, Asia, and North America. Evidence shows that approximately 18 percent of Latin American people of working age have participated in entrepreneurial activities (Larroulet & Couyoumdjian, 2009). The high level of entrepreneurial activity is consistent across all of the Latin American countries that participated in the GEM study, showing that the entrepreneurial pattern is consistent (Larroulet & Couyoumdjian, 2009).

These trends have not changed in the last few years. The latest GEM study (the 2013 Global report) reveals that the general populations in Latin America and the Caribbean aim to engage in entrepreneurial activities; 32.5 % of the working population (aged 18-64) have expressed the intention to engage in entrepreneurial activities (see Table 1). Again, of the adult population of working age (aged 18-64), 18.5 % of Latin American and Caribbean people are engaged in early stage entrepreneurial activities (see Table 2). GEM defines early stage entrepreneurial activity (TEA) as including individuals in the process of starting a new venture as well as those operating a business for less than 42 months (Amoros & Bosma, 2014: 12). If the analysis only includes the ten Latin American countries in the 2013 GEM survey, the number of TEA entrepreneurs jumps to over 20%. For Latin America and the Caribbean Region, there is quite a variance in the presence of early stage entrepreneurial activity (TEA) with Surinam only at 5.1% while Ecuador had 36% (see Table 2).

In the current GEM survey, respondents from Latin America and the Caribbean indicated that there is a strong culture that encourages and supports entrepreneurial activity. They very strongly agreed that they possess the abilities to recognize business opportunities (55.9%) and that they have the capabilities and skills to exploit these opportunities (58.4%). Only 28.9% expressed the view that they would avoid entrepreneurial activity (starting a new venture) because of a fear of failing (see Table 1).

National attitudes (the social context) also affects whether individuals will pursue entrepreneurial activities and whether those pursuits will be supported by others (Amoros & Bosma, 2014: 29). Latin American and Caribbean countries score quite well on the countries' pro-entrepreneurship attitudes (see Table 1). …

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