FEATURE PAPER

Investigating the Entrepreneurial Attitudes of African Americans: A Study of Young Adults

The following paper was written by Shanan G. Gibson from East Carolina University, Patrick Walker from Christopher Newport University, Michael Harris from East Carolina University, and Denisha Harris from Minority & Women Business Enterprise Program. It was presented at the 2010 Small Business Institute National Conference.

Abstract

An examination of the entrepreneurial attitudes of African American business students from multiple universities was conducted. Entrepreneurial attitudes were measured with the Entrepreneurial Attitudes Orientation (EAO) scale. Findings indicate that African American students have very high entrepreneurial attitudes compared with the validation sample of the EAO, and that these attitudes are even higher among those who have had prior entrepreneurial
exposure via a family-owned or self-owned business. These findings are believed to be consistent with current rates of minority-started businesses and known intergenerational linkagesin business ownership.

Introduction

As noted in multiple reports from the Global Entrepreneurship Monitor (GEM), entrepreneurs throughout the world often pursue business ownership either based on opportunity recognition or necessity due to the lack of viable economic alternatives. Consistent with this, research has
indicated that minorities are seeking out more entrepreneurial opportunities as a way to overcome the frustration and discontent from the lack of advancement opportunities in large organizations (Weiler & Bernasek, 2001; Heilman & Chen, 2003). These ventures not only
benefit individual investors, but also serve to improve overall market efficiency and innovativeness. While these numbers indicate that the entrepreneurial spirit is alive and well internationally, research indicates that many more people have entrepreneurial potential than ever actually become entrepreneurs (Kent, 1990). Of special concern is the degree to which African Americans may experience barriers that limit their potential in the entrepreneurial sector.

Before addressing potential obstacles historically faced by African Americans in regards to business ownership, it first important to understand the importance of entrepreneurship for minority groups. As suggested by Acs, Tarpley and Phillips (1998), a primary contribution of
entrepreneurial ventures is to allow minorities to enter the economic and social mainstream of American society. Similarly, past research has argued that the health and growth of African American-owned small businesses often serves as a strong barometer for the overall progress made by minorities in the U.S. (Feldman, Koberg & Dean, 1991; Thompson, 1999).

From a legal perspective, the passage of the Small Business Act has impacted the number of minorities who have considered entrepreneurship as a viable career choice. The Act proposes a relationship between training courses and small business development, which suggests that the actual and potential capacity of small business is encouraged and enhanced by the use of training (Martin, Wech, Sandefur & Pan, 2006). As a result of the governmental and educational initiatives, the number of opportunities for African Americans to receive training and education for small business development has substantially increased over the last three decades. Recent evidence seems to indicate that minority entrepreneurship has steadily increased during the past 2010 Small Business Institute® National Conference Proceedings Vol. 34, No.1 - Winter 2010 102 decade, with estimations that currently 30% of small businesses in the U.S. are owned by women or minorities (Bergman, 2006). Furthermore, numerous GEM reports extol the importance of involving minorities in the entrepreneurial process as it can play an important role in accelerating the overall pace of entrepreneurial activity within an economy (Reynolds, Camp, Bygrave, Autio, & Hay, 2001).

To date, little research has empirically examined the entrepreneurial attitudes and intentions of African Americans, particularly young adults. In fact, despite their recent increased involvement in business ownership, past research has indicated that minorities tend to be less optimistic overall in their expectations of business success (Carter, 2000), and are more likely to fail when starting a new venture (Carter, Williams & Reynolds, 1997; Boden & Nucci, 2000; Robb, 2002). Thompson (2004) points out that successful entrepreneurship requires a combination of temperament, talent and technique. It can be argued that temperament is first needed in order to convince African Americans of their potential in the entrepreneurial arena, and to encourage them to view business ownership as a viable career option. Thus, a stronger understanding of the entrepreneurial attitudes and intentions of young adults in the African American population can make an important contribution to the entrepreneurship research body.

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TIP OF THE WEEK

Ethical Stereotypes

Now, as in the past, the United States is viewed as providing an inviting and nurturing climate for those wishing to start their own enterprises and reap the rewards. To some extent, this is because the federal government has encouraged, to a greater degree than in most other countries, an atmosphere under which free market forces, private initiative, and individual responsibility and freedom can flourish.

These laws, enacted in response to society's changing perceptions of what constitutes ethical business practices, have had the equally desirable effect of encouraging those in many industries to develop codes of ethics-in large part because they wished to have the freedom to set their own rules rather than to have rules imposed on them by legislatures.

As the ethical climate of business has changed, so has the image of the entrepreneur. Horatio Alger personifies the good stereotype. Entrepreneurs doing business in the unfettered economic climate of the 19th century-the era of the robber barons, where acts of industrial sabotage were common-represent the ruthless stereotype. The battles of James Hill and Edward Harriman over the rights of railroads, the alleged sabotage by John D. Rockefeller of his competitors' oil refineries, the exploitation of child labor in New England's textile mill and of black labor in the southern cotton plantations, and the promoting of "snake oil" and Lydia Pinkham's tonics leave an unsavory aftertaste for today's more ethically conscious entrepreneurs.

Yet thoughtful historians of Americans entrepreneurship will also recall that regardless of the standards by which they are judged or of the motivations attributed to them, certain American entrepreneurs gave back to society such institutions as the Morgan Library and the Rockefeller Foundation. The extraordinary legacy of Andrew Carnegie is another example. (Scholars are much more inclined to examine and dissect the ethical behavior of the business sector, rather than that of the clergy, or even of academia itself. In many comparisons, the behavior of the business sector would look quite pure.)

Carnegie's case is also interesting because he described the total change of attitude that came over him after he had amassed his fortune. Carnegie, the son of a Scottish weaver, created a personal fortune of $300 million in the production of crude steel between 1873 and 1901. (That's $130 billion in today's dollars!) Carnegie believed that competition "insures the survival of the fittest in every department." Carnegie also felt that "the fact that this talent for organization and management is rare among men is proved by the fact that it invariable secures enormous rewards for its possessor." So apparently satisfied was Carnegie with the correctness of his view, he did not try to reconcile it with the fact that British steel rails were effectively excluded by a protective tariff equaling over half the production price of each ton of steel rails. That Carnegie's mind was not easy over his fortune, however, is evident from his statement, "I would as soon give my son a curse as the almighty dollar." After 1901, when he sold Carnegie Steel to United States Steel under pressure from a group headed by J. P. Morgan, Carnegie personally supervised donations in the United States and Great Britain of more than $300 million. Among his gifts to humanity were over 2,800 libraries, an Endowment for International Peace, and the Carnegie Institute of Pittsburgh

From today's perspective, these entrepreneurs might be described as acting in enlightened self-interest. However, when the same sort of entrepreneurial generosity is demonstrated today by such people as Armand Hammer of Occidental Petroleum, Ted Turner of CNN fame, and Bill Gates of Microsoft, we are more likely to speak of their acts as philanthropy than as fulfilling their social contract.

A touch of suspicion still tinges entrepreneurial activity, and the word entrepreneur may still connote to some a person who belongs to a ruthless, scheming group located a good deal lower than the angels. In 1975 Time suggested that a businessman might make the best-qualified candidate for U.S. president but noted the "deep-rooted American suspicion of businessmen's motives." Quoting John T. Conner, chair of Allied Chemical and former head of Merck and Company, Time's editors added, "Anyone with previous business experience becomes immediately suspect. Certain segments think he can't make a decision in the public interest." However, in 1988 the prophecy of Time was fulfilled when George Bush, an oil entrepreneur, was elected president of the United States. By the turn of the century, proven entrepreneurs like New York's Mayor Michael Bloomberg were seen as innovators who could bring a fresh new style of leadership to government.

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