This project identifies and analyzes those factors that affect the participation of racial or ethnic minorities in the entrepreneurial process and their success in creating new firms. Findings from earlier U.S. studies provide preliminary evidence that African-American and Hispanic individuals experience greater rates of erosion between the conception stage of the entrepreneurial process and fledgling new firm status. In addition, the businesses that are started remain smaller in regards to both size of revenues and number of employees. In this project we examine whether barriers exist during the entrepreneurial start-up process that cause some African-American or Hispanic individuals to give up their efforts and disengage, or whether those barriers generate limitations impacting business growth and success opportunities. The project is organized around a model representing individual assets, access to opportunity, social networks, and fledgling firms. This model allows us to explain how organizations actually emerge and develop explanations for why this process and the outcomes may be different for minorities and non-minorities. Research on these issues is limited and virtually none addresses the actual creation process for the business. A longitudinal design is adopted to follow nascent entrepreneurs across 24 months to determine the extent to which these factors explain differences in the experiences of African-American, Hispanic, and non-minorities as they move their businesses from the conception stage to that of fledgling new firm status. A random sample of U. S. households is screened to identify individuals at the initiation stage of new firm formation (nascent entrepreneurs) and a comparison group of randomly selected adults. Comparisons are made between the experiences of the groups starting businesses and their cohorts in the adult population. The project has strong potential for impacting public policy. If the attrition rate for bringing a new firm to fruition is higher for minorities than nonminorities and the proposed research can identify specific points of attrition and pinpoint probable causes, recommendations regarding appropriate assistance programs can be formulated. The development and delivery of training, information or resource assistance could be targeted more specifically to the critical stages of the gestation process where they could make the most difference.
