Ethnic Entrepreneurship: Ethnicity and the Economy in Enterprise (Working Paper #63)

Zulema Valdez, Center for Comparative Immigration Studies and Center for U.S.-Mexican Studies

Abstract: Although entrepreneurial success is often attributed to reciprocity in “ethnic resources” or “social capital,” this explanation does not directly address ethnic groups with marginal business-ownership, such as among Mexicans, or non-immigrant, “non-ethnic” business-ownership, such as among Whites. Instead of focusing on ethno-cultural differences, this presentation suggests that three forms of economic integration-market exchange, reciprocity, and redistribution–combine to facilitate entrepreneurship in a market economy. Relationships of exchange occur within a market economy in which a group is situated. Likewise, reciprocity, such as ethnic resources, or redistribution, such as government assistance, must also be situated within the context of the market when analyzing their impact on entrepreneurial success. Such a comprehensive and systematic perspective more fully explains ethnic differences in entrepreneurship. Using the 1990 CENSAS (long-form census data with tractlevel information) and the 1992 Characteristics of Business-Owners database, Valdez argues that in a capitalist economy, market exchange facilitates success while reciprocal and redistributive relationships compensate for market disadvantages, but will affect success only marginally.

Working Paper #63ยป