What Metropolitan-Level Factors Affect Latino- Owned Business Performance?
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WHAT METROPOLITAN-LEVEL FACTORS AFFECT LATINO- OWNED BUSINESS PERFORMANCE? A Dissertation Presented to The Academic Faculty by Jessica Lynn Harbour Doyle In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the School of City and Regional Planning, College of Design Georgia Institute of Technology December, 2018 COPYRIGHT © 2018 BY JESSICA L. H. DOYLE WHAT METROPOLITAN-LEVEL FACTORS AFFECT LATINO- OWNED BUSINESS PERFORMANCE? Approved by: Dr. Catherine L. Ross, Advisor Dr. Alberto Fuentes School of City and Regional Planning School of City and Regional Planning Georgia Institute of Technology and School of International Affairs Georgia Institute of Technology Dr. Cathy Yang Liu Dr. Nancey Green Leigh Andrew Young School of Policy Studies School of City and Regional Planning Georgia State University Georgia Institute of Technology Dr. Kaye Husbands Fealing School of Public Policy Georgia Institute of Technology Date Approved: November 6, 2018 To the memories of my grandfather, Joseph Gutstein, and my mother, Gail S. Harbour Acknowledgments My first thanks go to Dr. Catherine L. Ross, who was willing to take a chance on me not once but twice; first as a potential new graduate student in 2005, and then again when I came back from a long leave with a new thesis topic. I have been lucky to benefit from her patience, her enthusiasm, and her intelligence. I would also like to thank my committee—Dr. Cathy Yang Liu, Dr. Kaye Fealing, Dr. Alberto Fuentes, and Dr. Nancey Green Leigh—for their thoughtful feedback and commitment. Dr. Dan Immergluck of Georgia State University and Dr. Anna Joo Kim of San Diego State University also gave valuable input to this research project in its proposal stage. Dr. Leigh Bottomley provided valuable assurance and practical advice in the final months. Finally I would like to express gratitude for my family, particularly my husband, Mike Doyle, whose combination of practical thinking and love helped sway me from a habit of self-pity. This dissertation would never have been completed without his support. iv Table of Contents Acknowledgments ................................................................................................ iv List of Tables ......................................................................................................... x List of Figures ..................................................................................................... xiv Summary ............................................................................................................. xvi Chapter 1 : Introduction ...................................................................................... 1 1.1 What Metropolitan-Level Factors Affect Latino-Owned Business Performance? .................................................................................................................. 1 1.2 Entrepreneurship, Immigration, and Planning Research .............................. 5 1.3 A Potential Model for Understanding Latino Entrepreneurship ................... 8 1.4 Structure of the Dissertation ....................................................................... 11 Chapter 2 : Recent Trends in Latino Settlement and Business Creation ...... 14 2.1 Introduction: The Latino Population of the United States .......................... 14 2.2 Who Is Latino? ............................................................................................ 16 2.3 Shifts in Latino Settlement Since 1990 and the Creation of “Gateways”... 20 2.4 An Overview of Latino-Owned Business Activity ..................................... 29 2.5 Immigration Law, Enforcement, and Latino Settlement Patterns............... 39 2.6 Conclusion .................................................................................................. 44 Chapter 3 : Literature on Ethnic Entrepreneurship and Latino Entrepreneurship ............................................................................................................ 46 3.1 Introduction ................................................................................................. 46 3.2 How, and Why, Immigrants Become Entrepreneurs .................................. 47 3.2.1 Theories of Immigrant Entrepreneurship ............................................. 48 3.2.2 Pushed or Pulled? ................................................................................. 52 3.3 Difficulties Faced by Immigrant Entrepreneurs ......................................... 54 3.3.1 Does Entrepreneurship Benefit Immigrants? ....................................... 54 3.3.2 Informational Gaps Faced by Immigrant Entrepreneurs ..................... 57 3.3.3 Immigrants’ (Lack of) Access to Startup Capital ................................ 58 v 3.4 Ethnic Enclaves and Social Networks ........................................................ 61 3.4.1 Immigrant Entrepreneurs’ Strategies ................................................... 61 3.4.2 Defining the Ethnic Enclave ................................................................ 63 3.4.3 How the Ethnic Enclave Supports Entrepreneurs ................................ 66 3.4.4 Disadvantages Outside and Within the Enclave .................................. 69 3.5 Financing and Information Resources ........................................................ 72 3.5.1 Government-Backed Financing Programs ........................................... 73 3.5.2 Ethnic Banks and Community-Based Organizations ........................... 76 3.6 Introducing Geographic Variables to Immigrant Entrepreneurship Research ....................................................................................................................................... 79 3.7 The Literature on Latino Entrepreneurs ...................................................... 86 3.7.1 Latinos: Pushed or Pulled into Entrepreneurship? ............................... 87 3.7.2 Latino Entrepreneurs in Ethnic Enclaves ............................................. 89 3.7.3 Latino Entrepreneurs Facing an Informational Gap ............................ 97 3.7.4 Latino Entrepreneurs’ Access to Financing Sources ......................... 100 3.8 Conclusion: Latino Entrepreneurs and Changing Geographies ................ 103 Chapter 4 : Comparing Latino-Owned Business Performance at the MSA Level ............................................................................................................................... 108 4.1 Introduction ............................................................................................... 108 4.2 Methodology ............................................................................................. 110 4.2.1 Determining Dependent and Independent Variables ......................... 110 4.2.2 Methods of Analysis .......................................................................... 114 4.3 How Are Latino Entrepreneurs Different from Non-Latinos? Evidence from the Annual Survey of Entrepreneurs ........................................................................... 116 4.3.1 Industry .............................................................................................. 119 4.3.2 Citizenship Status at Birth ................................................................. 120 4.3.3 Age of Owner ..................................................................................... 120 4.3.4 Formal Education ............................................................................... 122 4.3.5 Reason for Starting a Business .......................................................... 122 4.3.6 Prior Self-Employment Experience ................................................... 125 4.3.7 Number of Hours Worked Per Week on Business ............................. 125 vi 4.3.8 How Business Was Acquired............................................................. 126 4.3.9 Age of Business ................................................................................. 127 4.3.10 Intellectual Property Holdings ......................................................... 129 4.3.11 Operations Outside the United States .............................................. 129 4.3.12 Language Spoken at the Business .................................................... 129 4.3.13 Family Ownership ............................................................................ 130 4.3.14 Source and Amount of Initial Startup Capital .................................. 130 4.3.15 Negative Impacts on Business ......................................................... 132 4.3.16 Success in Establishing New Funding Relationships ...................... 132 4.3.17 Profitability ...................................................................................... 133 4.3.18 Business Operating Status and Causes of Shutdown ....................... 133 4.3.19 Projected Future of the Business...................................................... 134 4.3.20 Summary of Conclusions from the 2014 ASE Data ........................ 134 4.4 Differences in Latino-Owned Business Performance by MSA ................ 135 4.4.1 Latino-Owned Business Performance Between 2002 and 2012 ........ 136 4.4.2 Share of Latino-Owned Firms in Construction as a Potential Independent Variable .............................................................................................. 137 4.4.3 Why Credit Availability Is a Difficult Independent Variable to Measure ................................................................................................................................