Race and Ethnicity

T he U.S. government reports on minority business ownership as part of the regular economic census performed every 5 years in years ending in 2 or 7. For the purposes of this census, minority-owned businesses are all those not owned by nonminority (Caucasian) business owners. By this definition, minority-owned businesses make up approximately 15% of all U.S. firms. Between 1992 and 1997, minority firms grew at a rate that far outstripped the growth rate of non-minority firms; minority-owned firms grew at 30% while nonminority firms grew at 4% (U.S. Small Business Administration [SBA], 1997). According to the U.S. Small Business Administration, there are currently about 3 million minority-owned firms in the United States that generate approximately $495 billion in revenues and employ almost 4 million workers (SBA, 2002). What the general numbers mask is the diversity of the phenomena of minority business ownership. During that same 5-year time frame, the number of Hispanic-owned and Asian-owned businesses each grew by 30%. The number of Black-owned businesses grew by 26% while, notably, the number of businesses owned by Native Americans grew by 84% (Greene & Chaganti, 2003). This type of variation in self-employment levels across racial and ethnic groups has been observed (Fairlie & Meyer, 1996; Reynolds & White, 1997) and yet frameworks to explain these differences and advance our understanding of ethnic economic activity remain limited. This chapter begins with a conceptual consideration of the topic of minority entrepreneurship and examines the theoretical frameworks as each relates to business creation and development. We next discuss the background of the minority ownership variables in the Panel Study of Entrepreneurical