Exports by the Asian American and Hispanic-Owned Enterprises: Are There Significant Differences?

By Ekanem, Nkanta F. | Multinational Business Review, Fall 2000 | Go to article overview

Exports by the Asian American and Hispanic-Owned Enterprises: Are There Significant Differences?


Ekanem, Nkanta F., Multinational Business Review


The study presents evidence to show that Asian American and Hispanic American exporters export mostly to customers in countries with whom they have the most cultural affinity. Their export capability is determined by their personal traits, such as age, education and managerial experience. Some firm characteristics also play important role. The characteristics include the owners' financial commitments in start-up capital. This Start-up capital determines the firms' size and in turn affects the firms' ability to finance expensive export activity and the firms' future growth potentials. Other firm characteristics include sales receipt and the industry in which the firm is operating.

INTRODUCTION

Many economists have raised serious questions about the quality of the Bureau of the Census data on minority-owned enterprises. They believe that the Bureau's reliance on the IRS tax information by Schedule S corporations in 1982 yields more information on small sized enterprises with less than $500 in sales receipts, but not on the large number of medium- sized and large enterprises which file tax information as C corporations. Because of this, economists believe that there is a serious bias in the database in favor of large corporations, and so question the relevance of any study on this sensitive subject. It is indeed legitimate to raise questions concerning the validity of conclusions and policy application of any study based on inaccurate database, because the conclusions are bound to be as flawed as the data on which the studies are based. However, the criticisms are more applicable to the 1982 survey of minorityowned enterprises, because steps have been taken to correct some of the data problems in 1987, and more so in the 1992 survey. For more on the characteristics of business owners and the data problems, please see Nucci (1992). According to the Bureau of the Census, there were 422,373 Hispanic-owned enterprises in operation in 1987. Of this number, 339,465 enterprises or 80.3% had no-paid employees, while 82,908 or 19.6% of those enterprises had paid employees. Statistics also shows that 28.0% of these enterprises had less than $5,000 annual sales, 60.8% had between $5,000 and $99,999 in annual sales, 9.1% had between $100,000 and $499,999 in annual sales, while 1.6% of the Hispanic-owned enterprises reported annual sales in excess of $500,000. This means that, by White's definition (1982), 71.5% of the Hispanic-owned enterprises could be classified as medium-sized or large compared to 76.2% Asian-owned. Only 4.1% of these enterprises were involved in exporting at all levels, while 82.3% did not export at all. On the other hand, the Census reported 354,120 Asian-owned enterprises with average annual sales of $91,000 per firm in 1987. These are enterprises owned by Asian Indians, Chinese, Japanese, Koreans, Vietnamese, Filipinos, Hawaiians, and other Asian and Pacific Islanders. About 76.2% of Asian-owned enterprises can be classified medium-sized or "large" in 1987, because their average annual sales are in excess of $5,000, and about 1% of them have average annual sales of over $1,000,000, compared to about 0.6% Hispanic-owned. A large percent of Hispanicowned enterprises, (72.8%) had no paid =ployees, while 27.2% of them had paid employees. About the same number of Asianowned and Hispanic-owned enterprises were not involved in exporting, while 81.7% Asianowned and about 82.3% Hispanic-owned were. About 4.5% Asian-owned and 4.1% Hispanicowned enterprises reported exports at all export levels. Several owner-specific and enterprise-specific factors determine minority-owned enterprise exports. This study is intended to investigate the factors that determine the export activities of Asian- and Hispanic-owned enterprises. Although many of the business-owners of these minority groups have a long history of management and business ownership in this country, deep cultural differences are believed to determine their level of penetration into the export markets which they target. …

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