Latest GEM

Study Looks at US Minority Entrepreneurship

WELLESLEY, Mass., Nov. 18 /PRNewswire-USNewswire/ -- Although the U.S. continues to rank high in entrepreneurial activity, the new GEM study suggests a portentous weakening in the nation's normally robust entrepreneurial engine.

According to the "Global Entrepreneurship Monitor (GEM) 2006-2007 National Entrepreneurial Assessment for the United States of America," conducted by Babson College and Baruch College, while U.S. entrepreneurship was 50% higher than the average of all other high-income (GEM) countries and equals the rate in low-and middle-income (GEM) countries, there was a large decline in entrepreneurial activity from 12.4% in 2005 to just 9.6% in 2007.

Additionally, the U.S. showed a greater decline in growth among seven key industries in 2007 than in the recession of 2001, suggesting a precursor to a deeper recession in 2008 and/or 2009.

For the first time, GEM has reported on U.S. minority business owners and their families (through the Baruch College Minority Business Owners Survey (NMBOS)) from four groups: Korean Americans, Mexican Americans, African Americans, and a White American control group. It is clear that entrepreneurship offers immigrants and minorities a valid means to thrive in the U.S.

GEM found that minorities exhibit higher rates of entrepreneurship than whites and exhibit the same demographic and motivation patterns as white entrepreneurs in terms of types of businesses, growth expectation, education, and gender.

White Americans and Mexican Americans both exhibited fewer percentages of their entrepreneurs in the lower-income groups, and a higher percentage of their entrepreneurs in the higher-income groups than did African Americans and Korean Americans. This was especially true for established businesses compared to start-up businesses (less than 42 months old).

Another key finding for minority entrepreneurs is their motivation for starting a business. 70.4% of African Americans, 57.1% of Korean Americans, and 72.6% of Mexican Americans started their businesses after perceiving that they were rejected for a job because of their ethnicity.

Go to: www.gemconsortium.org to download the GEM 2006-'07 U.S. Report and to access the GEM Global data. Go to: http://zicklin.baruch.cuny.edu/centers/field/research.html to request access to NMBOS data.

Key U.S. Findings:

-- Decline: The U.S. ranked ninth and sixteenth in established business

(more than 42 months) prevalence rates for high-income countries for

2006-07, respectively. This decline in 2007 was due, in part, to other

GEM high-income countries on average experiencing a high growth in the

percentage of their entrepreneurs in established businesses, while the

U.S. experienced a slight decline.

-- The percentage of early-stage entrepreneurial activity based on

necessity has increased from 12.1% in 2005 to 15.6% in 2007. This

increase may be due, in part, to the economic slowdown in the U.S.

-- Gender differences remain high for both early-stage entrepreneurs and

established business entrepreneurs with entrepreneurship rates for

males 50% higher than that of females in the U.S.

-- 40% of U.S. start-ups indicate they expect no job growth in the next

five years.

-- Consumer-oriented startups dominated, but they declined somewhat in

2007. Startups in the business-services sector increased (22.5% in

2006 to 34.8% in 2007). Declines also prevailed in the transformation

sector--manufacturing and construction industries--because of a

downturn in the housing industry.

-- U.S. entrepreneurs express high satisfaction with access to public

institutions for advice (Small Business Administration, Small Business

Development Centers, economic development groups, Chambers of

Commerce). But Korean-Americans seek a much lower level of outside

advice for their businesses.

-- GEM recommends that public policy makers continue to support

early-stage entrepreneurship and small businesses with both national

and local initiatives in education and business advice.

About GEM U.S. Team

In January 2008, Babson College invited Baruch College to join the GEM United States Team. The partnership brings together the expertise from the Arthur M. Blank Center for Entrepreneurship at Babson with that from the Lawrence N. Field Center for Entrepreneurship at Baruch College, specifically around minority and immigrant entrepreneurship.

As a result of the partnership, the GEM 2008 Adult Population Survey includes several new questions aimed at shedding more light on minority and immigrant entrepreneurship. For the first time, the report explores issues related to Korean American, Mexican American and African American business owners and the issues hypothesized to have an impact on business ownership patterns including: education, gender, family structure and responsibilities, access to capital, business experience, personal and family goals, and business management and performance. SOURCE Babson College

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