The rate of entry of Hispanics into entrepreneurial activity increased from a monthly average rate of new business creation of 0.33 percent of Hispanic adults in 1996 to a rate of 0.52 percent in 2011, while remaining relatively constant for White, non-Hispanics (Fairlie, 2012). Using the NLSY, 1979 Cohort, this chapter presents a portrait of Hispanic entrepreneurs in the United States and provides a comparison to non-Hispanic entrepreneurs on a number of human capital and socio-demographic variables to develop a better understanding of the factors that contribute to the decision to pursue entrepreneurship. Comparisons are also made among Hispanic origin groups.
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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. Risk-taking has been found to have an impact on the decision to enter self-employment (Wang, Prieto, Hinrichs, & Milling, 2012). 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.
Kroeck, Bullough & Reynolds (2010) found significant differences in locus of control between nascent entrepreneurs and non-entrepreneurs using panel data from the U.S. Panel Study of Entrepreneurial Dynamics and a domain-specific measure of internal locus of control. An internal locus of control indicates a strong belief in personal control of one’s destiny, while an external locus of control indicates a greater belief in the power of luck or fate in impacting the events that shape one’s life. They found that female entrepreneurs were more internal than male entrepreneurs, despite women in the comparison group and overall scoring more external than men. Hispanic entrepreneurs were found to be slightly less internal than White/Caucasian entrepreneurs.