‘American Enterprise’ – Entrepreneurship for the ‘Other’

Sociologist, author and educator Zulema Valdez talks with us about the realities of business ownership for members of minority communities.

Candice Helfand-Rogers By Candice Helfand-Rogers

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Editor’s Note: This piece is part of an ongoing series on female entrepreneurs of color. Read more here.

To the trained eyes of Zulema Valdez, entrepreneurship is about much more than financial know-how and business savvy. It’s also about managing issues like race, class, religion and gender — for some, all at the same time.

Her career has focused on how those factors affect the economic chances of entrepreneurs in the United States — issues tackled deftly in her book, “The New Entrepreneurs: How Race, Class and Gender Shape American Enterprise.”

Valdez is an associate professor of sociology at the University of California, Merced. She has written and spoken extensively on “intersectionality,” the examination of how various forms of oppression interact, at venues ranging from women’s prisons to a congressional briefing in the nation’s capital.

Over the years, Valdez has learned a great deal about the roles race and gender play in business ownership. And she has found that not all news is good news. “American entrepreneurs are a diverse group,” she says. “But the increase in women pursuing entrepreneurship, while a positive development, is only part of the story.” A woman’s race or ethnicity can also have a significant impact her startup tale.

When we spoke, Valdez offered insights into the kinds of ventures minority owners run, the ongoing disparities female entrepreneurs grapple with, and what happens when these hinderances combine.

Edited interview excerpts below.

The Story Exchange: How are entrepreneurs of color faring in today’s economy? 

Immigrants make up a significant portion of American entrepreneurs. And while most immigrant-owned businesses are small family-owned restaurants or “mom and pop” shops, a portion do comprise elite firms and large corporations. In fact, 40 percent of today’s Fortune 500 companies were founded by immigrants or their descendants.

But also, the vast majority — 85 percent — of minority entrepreneurs are “self-employed,” defined as those who work on their own account with no paid employees. Most self-employed minorities are concentrated in the low-wage, low-skilled service industries, including repair, maintenance and personal services. And with the exception of Asian business owners — who, like non-Hispanic whites, make up a larger share of business owners than their proportion of the total U.S. population — most racial minorities make up a smaller proportion of business owners than their total population.

The Story Exchange: What about women business owners?

The U.S. is first among 25 industrialized countries in the number of women engaged in enterprise, with one out of every ten businesses owned by women. And the U.S. Census reports that the proportion of women who own businesses in the United States is on the rise. These numbers suggest that women are enjoying greater opportunities to engage in business ownership than ever before, with America leading the way.

But women-owned businesses have not reached parity with male-owned businesses. Moreover, firms owned by women underperform in comparison to firms owned by men across a variety of measures, including business longevity, sales and number of employees. For example, the 2007 Survey of Business Owners found that women-owned firms generated a total of $1.2 trillion in receipts and accounted for 6.4 percent of total employment. When compared to the $8.5 trillion in receipts and 35 percent of total employment generated by men-owned firms, the gender disparities are clear.

And while women’s ownership share of elite firms has grown, only 2 percent of women-owned firms report revenue of $1 million or more — and of that 2 percent, only a small fraction (15 percent) report revenue of $10 million or more. At best, women reach only 60 percent of men’s success in enterprise. Understanding gender differences in enterprise is an important first step to improving conditions for would-be women entrepreneurs.

The Story Exchange: Do women business owners of color grapple with more difficulties than white female entrepreneurs? 

Women business owners, regardless of race, face unequal access to the resources and support that facilitate business ownership. Women of color may experience greater disadvantages associated with their racial or ethnic minority status. Women continue to fall behind men on most indicators of business participation and success.

The Story Exchange: What are some ways in which we, as a society, can address these inequalities?

Improving access to education; seeking out business training and planning workshops; building bridges between men and women that serve to dismantle “old boys’ networks”, which severely limit women’s capacity to exploit informal social networks the way men do; improving access and opportunity to alternate avenues of financial support; and challenging traditional gender expectations at home and work are all ways to address persistent gender disparities in business ownership.

The Story Exchange: What inspired you to begin researching entrepreneurship in an intersectional fashion?

My writing responds to and challenges an earlier body of literature in which the orthodox analytical approach to understanding entrepreneurship had been to focus on either “rugged individualists” who achieve success through determination and innovation, or “ethnic entrepreneurs” who rely on ethnic ties and collectivist ideologies to gain a foothold in business. I believed these approaches underscored one dimension of identity only, which at best offered a partial explanation for American enterprise.

I sought to consider how individual agency, group membership, and structural forces combine to shape American enterprise. I argued that the intersection of race, class, gender and other social groupings shapes entrepreneurial experiences and outcomes in our highly stratified — and unequal — American economy.

The Story Exchange: Could you give us an example?

Middle-class Korean-American men are likely to possess education, skills and personal savings, and can secure the loans necessary to start a business. Their co-ethnic, male and middle-class networks, in the context of a thriving ethnic enclave economy, provide additional resources and support that facilitate business ownership. In contrast, working-class Mexican immigrant women possess fewer marketable skills, economic resources and social capital, and thus confront greater economic uncertainty.

Although their age, class, gender, racial and ethnic ties may provide some sources of support, such as providing domestic workers with the networks to meet new or potential clients, the effect of their social-capital resources is ultimately limited by their disadvantaged position within the secondary sector of the economy.

Check back tomorrow afternoon for the rest of our chat with Valdez, which focuses on Latina entrepreneurship.

Posted: May 19, 2015

Candice Helfand-Rogers‘American Enterprise’ – Entrepreneurship for the ‘Other’