Hispanic Entrepreneurs: Moving Forward by Looking Back

IntroductionHispanics are the fastest growing demographic group in the United States. While the general U.S. population increased 9.9 percent from 2000-2010, the number of Hispanics in the U.S. increased 44.1 percent over that same time period. The proportion of Hispanic residents has increased from 12.5 percent of the U.S. population in 2000 to 16.4 percent in 2010 (Motel, 2012). The U.S. Department of Labor's Bureau of Labor Statistics projects growth in the labor participation rate of Hispanics of 3.0 percent annually between 2011 and 2020, compared with an annual 0.2 percent decline in the White, non-Hispanic, labor participation rate. In 2010, the Hispanic labor force was 22.7 million with a 14.8 percent share of the total U.S. labor force, and it is projected to reach 30.5 million in 2020, with an 18.6 percent share (Toossi, 2012). With Hispanics constituting an increasingly larger share of the U.S. workforce, determining future labor force trends will require an understanding of occupational decisions made by Hispanic workers. The rate of entry into entrepreneurial activity began to increase for Hispanics in the latter part of the 2000s. In 1996, an average of 0.33 percent of Hispanic adults created a new business each month in the United States. That rate, 0.33 percent, was the same for White, non- Hispanic, adults, and was 0.31 percent for the total population. By 2011, the rate had increased to 0.52 percent for Hispanics while remaining relatively constant for White, non-Hispanics (Fairlie, 2012). This paper focuses on the differences between Hispanic and non-Hispanic workers that may affect their decisions to enter entrepreneurship.Research on entrepreneurship is varied. One stream of research seeks to discover the reasons that an individual makes a choice to pursue self-employment as a primary occupational activity. Sequeira, Mueller, & McGee (2007) have identified several approaches that have been used to identify why someone would choose to become an entrepreneur: explaining how ideas evolve into new ventures, applying motivation models to explain the impact of individual differences on choice of entrepreneurship and focus on the "gestation" period during which the process of entrepreneurial behavior takes place. Both internal and external reasons contribute to the decision to start a business. External reasons include access to capital and perceived ability to meet market demands, while internal reasons include individual motivation and personality factors (Lofstrom & Wang, 2007; Schiller & Crewson, 1997; Krueger, 1998). While access to capital should (theoretically, at least) be similar for all demographic groups, individual factors can be expected to differ based on race, ethnicity and other demographic characteristics. Differences in human capital and individual characteristics have been found between Hispanic and non-Hispanic managers and professionals (Bishop & Surfield, 2012; Johnson, Ruiz, & Nguyen, 2012), and thus may be expected to be found among entrepreneurs.This paper presents a portrait of Hispanic entrepreneurs and provides a comparison to non-Hispanic entrepreneurs. For purposes of this study, an entrepreneur is defined as an individual who has entered into self-employment as a primary economic activity-and has not been enrolled in school on a full-time or part-time basis during that time-at some point during their career. The National Longitudinal Survey of Youth, 1979 Cohort, (NLSY79) is used to identify periods of self-employment and provide insight into some of the factors that may have contributed to an individual deciding to become an entrepreneur at some point over a span of thirty years. The longitudinal nature of the NLSY79 study provides access to several stable individual difference variables that were measured in youth, as well as data on some of the commonly used human capital variables and socio-demographic status variables.Methods and VariablesThe NLSY79 is a nationally representative sample of 12,686 young men and women who were between 14 and 22 years of age when they were first surveyed in 1979. …