Creating Jobs? Employment in Women-Owned Minority Businesses

By Smith-Hunter, Andrea E.; Boyd, Robert L. | Journal of Business and Entrepreneurship, October 2004 | Go to article overview

Creating Jobs? Employment in Women-Owned Minority Businesses


Smith-Hunter, Andrea E., Boyd, Robert L., Journal of Business and Entrepreneurship


ABSTRACT

The topic of employment is central in both scholarly and public policy discussions of minority enterprise, yet few studies have examined the creation of jobs in businesses owned by minority women. We address this oversight by analyzing Dun and Bradstreet data on businesses owned by Asian, Hispanic, and Black women, focusing on the relationship between number of employees (the dependent variable) and sale volume and net worth (the explanatory variables). Our results show that this relationship is positive and is stronger for businesses owned by Asian and Hispanic women than for businesses owned by Black women. We suspect that the difference exists because the firms of Asian and Hispanic women are situated in ethnic enclaves that bolster the job creation capacity of these businesses. In conclusion, we recommend that researchers view minority women business owners as entrepreneurs who can generate jobs, not merely as "survivalists " who become self-employed only for the purpose of escaping gender discrimination in the workforce.

INTRODUCTION

One of the strongest arguments for promoting minority enterprise is that minority-owned businesses will generate employment. Rooted in the economic development proposals of the 1960s (notably, "black capitalism"), this argument has been reinvigorated by claims that immigrant entrepreneurs often create jobs for fellow newcomers, providing them with a foothold in the labor market (Kasarda, 1995; Light & Gold, 2000). It has even been suggested that employment in businesses owned by Asians and Hispanics offers co-ethnics an escape route from discrimination and a road to upward social mobility (Wilson & Portes, 1980; Zhou & Logan, 1989). These assertions, however, have been challenged. Some critics have argued persuasively that minority-owned businesses, particularly those owned by Blacks, tend to be small and undercapitalized and thus have little potential to substantially increase the number of jobs (Brimmer & Terrell, 1971) or opportunities for socioeconomic advancement (Bates, 1997; Sanders & Nee, 1987). Nonetheless, small-businesses do create the majority of new jobs (Birch, 1987), so it is reasonable to surmise that viable businesses owned by minorities can expand employment, and that efforts to support such firms can, in a modest way, benefit minority groups and the whole society (Butler, 1991; Light & Rosenstein, 1995).

The argument that minority-owned businesses can provide jobs takes on a new dimension when one considers the special case of women-owned minority businesses. Minority women have been characterized as "doubly disadvantaged" in the labor force, owing to the hardships caused by racism and sexism (Smith & Tienda, 1988). Yet, the number of these women who own businesses is growing, not only because of the general progress of minority women, which has improved their endowments of both human and financial capital, but also because of the pressing need that these women face to locate alternatives to traditional careers (i.e., to break the "glass ceiling"). The contribution of minority women to the expansion of the entrepreneurial sector has, accordingly, received widespread attention (e.g., Light & Gold, 2000; Loscocco & Robinson, 1991; Smith-Hunter, 2003; Westwood & Bhachu, 1988). However, despite this rising interest, few studies have examined job creation by women-owned minority businesses. This oversight is remarkable, for employment growth has been a central topic in research on minority enterprise, and the inroads that minority women are making into the economy - and into the small-business realm, in particular - are recognized as societal trends that are eminently deserving of scholarly investigation. Perhaps this issue has been neglected because of the tendency of many researchers to view self-employed minority women only as "survivalist entrepreneurs" - that is, proprietors of marginal establishments, such as beauty salons, who are seeking relief from labor market disadvantage (e. …

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