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The Effect of Social Capital and Identity Factors on Latino/A Business Network Success in New Destination Communities Bridget K

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The Effect of Social Capital and Identity Factors on Latino/A Business Network Success in New Destination Communities Bridget K Iowa State University Capstones, Theses and Graduate Theses and Dissertations Dissertations 2010 The effect of social capital and identity factors on Latino/a business network success in new destination communities Bridget K. Welch Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/etd Part of the Sociology Commons Recommended Citation Welch, Bridget K., "The effect of social capital and identity factors on Latino/a business network success in new destination communities" (2010). Graduate Theses and Dissertations. 11389. https://lib.dr.iastate.edu/etd/11389 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. The effect of social capital and identity factors on Latino/a business network success in new destination communities by Bridget K. Welch A dissertation submitted to the graduate faculty in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Major: Sociology Program of Study Committee: Terry L. Besser, Major Professor Sharon R. Bird Alicia D. Cast Jan L. Flora Carl W. Roberts Iowa State University Ames, Iowa 2010 Copyright © Bridget K. Welch, 2010. All rights reserved. ii DEDICATION To my husband, Robert Welch, whose love makes everything I do possible and gives me the reason to do it. To my mom, Judith Diamond, who may not have been able to bring herself to be here to see me finish, but who made me believe that I could. iii TABLE OF CONTENTS LIST OF TABLES Vi LIST OF FIGURES vii ACKNOWLEDGMENTS viii ABSTRACT ix CHAPTER ONE: NEW DESTINATIONS 1 Demographic Shifts in Latino/a Immigration 3 Immigration Policy 5 Labor Market Forces 7 The “IBP Revolution” 9 Cutting Wages 11 The Influx of Latino/a Workers 15 Community Pull Factors 18 Latino/a Entrepreneurship in New Destinations 21 CHAPTER TWO: LATINO/A ENTREPRENEURSHIP IN NEW DESTINATIONS 24 Social Capital and Ethnic Entrepreneurship 26 The Ethnic Economy 27 Opportunity Structures 29 Group Characteristics 32 Ethnic Strategies 34 The Ethnic Enclave 35 Social Capital and New Destinations 42 Conditions in New Destinations 44 Trust and Business Networks 49 Strategic Network Theory 54 Theorized Bases of Trust for Latino/a Entrepreneurs in New Destinations 58 CHAPTER THREE: SHARED IDENTITIES AND BOUNDED SOLIDARITY 60 Structure, Agency and Identities 60 Racial and Ethnic Identities 61 Racialization and Ethnicization 64 Shared Identity Theory 67 Self-Verification Motivation 69 Self-Enhancement Motivations 72 Shared Interests 74 Shared Institutions 76 Shared Culture 79 Construction of the “We” Versus “They” Dichotomy 81 iv The Consequences of Shared Identity Formation 87 CHAPTER FOUR: METHODS 92 Time Periods 93 Time Period One: 2003 – 2006 94 Time Period Two: 2006 – 2009 94 Time Period Three: 2009-2010 94 Summary of Data 95 Measures 98 Trust 98 Benefits and Sustainability 100 Racialization 103 Ethnicization 103 “We” Versus “They” Dichotomy 107 Analytical Techniques 110 Qualitative Analysis 110 Network Analysis 111 Other Statistical Analytic Techniques 113 CHAPTER FIVE: RESULTS 115 Social Context 117 Trust 121 Reliance on Family for Aid 122 Third Party and History Based 123 Benefits and Sustainability 129 Trust 129 Network Exchange 131 Low-Risk Exchange 132 High-Risk Exchange 133 Networking Patterns 134 Network Sustainability 138 Racialization 140 Ethnicization 142 Shared Interests 142 Cooperation 148 “We” Versus “They” Dichotomy 149 Perceived Similarity 150 Playing on the Same Team 152 “We-ness” Based Trust 153 Summary of Results 153 CHAPTER SIX: DISCUSSION 157 Three Bases of Trust Development 158 Third Party and History-Based 160 Sense of “We-ness” 161 v Shared Identity Theory 162 Racialization 163 Ethnicization 164 “We” Versus “They” Dichotomy 167 Deployment of Trust 169 Benefits and Sustainability 169 Resource Exchanges 170 Study Implications 171 Limitations and Directions for Future Research 173 Conclusion 176 REFERENCES 178 vi LIST OF TABLES Table 1 Iowa Counties with Highest Percent of Latino/a Settlement: 2000 and 2008 4 Table 2 Summary of Data for Exploratory Research 93 Table 3 Themes for Analysis, Hypotheses, and Data for Analysis 96 Table 4 Descriptive Statistics for Trust Theme Measures 99 Table 5 Descriptive Statistics for Benefit and Sustainability Theme Measures 101 Table 6 Descriptive Statistics for Racial and Ethnic Theme Measures 104 Table 7 Descriptive Statistics for “We” versus “They” Theme Measures 109 vii LIST OF FIGURES Figure 1 The Path from Trust Development to Network Sustainability 59 Figure 2 The Formation of a Shared Identity 90 Figure 3 Multidimensional Scaling of Trust in Latino/a Business Network 125 Figure 4 Multidimensional Scaling of Exchange in Latino/a Business Network 136 Figure 5 Complete Model of Paths from Trust Development to Network 155 Sustainability viii ACKNOWLEDGEMENTS There are many people who made my graduate career and this dissertation possible. I want to acknowledge Himar Hernandez. His dedication and enthusiasm inspired much of this work. I am also deeply thankful to my fellow graduate students. In particular, the support of Anna Kosloski (my favorite sounding board) was invaluable. Members of my dissertation committee provided much needed advice throughout my entire career. Specifically, I wish to thank Drs. Sharon Bird, Jan Flora, and Carl Roberts for their thoughtful comments which strengthened this dissertation to a great degree. I would like to especially thank Dr. Alicia Cast for her comments on Chapter 3 and for helping me in the final steps of submitting my dissertation. Finally, this work would not be possible without the support, guidance, encouragement, and frank critiques from Dr. Terry Besser. She continues to be the model of a professor to which I inspire. Support for the research in this dissertation was provided by a 2005 grant from the National Science Foundation, Organizational Change and Innovation Program. The project title was “Collaborative Research: Small Business Network Creation and Outcomes for Change and Innovation.” PIs: Nancy J. Miller and Terry L. Besser. ix ABSTRACT Most of what is currently known about the success of immigrant businesses was developed out of research focused on ethnic entrepreneurs embedded in cities. These entrepreneurs are able to draw on ties to co-ethnics to achieve advantages – a result of social capital. What is known about Latinos in rural new destinations suggests that they will not be able to develop these co-ethnic ties. As such, other avenues for Latino/a business success need to be found. One such avenue is membership in a business network. The same factors that make it difficult to develop social capital for these entrepreneurs (particularly cultural impediments to developing trusting relationships outside of family relations) also make membership and sustainability of a business network problematic. This dissertation proposes that trusting relationships (or social capital) can be developed through assurance from a trusted third party that others in the network can be trusted, a history of interaction between members, and a sense of “we-ness” (or, in this case, self-identification as “Latino/a”). As this sense of “we-ness” is usually based on a shared ethnicity (a requirement lacking in new destinations which are composed of Latinos from many different nations), a theory of how to develop a sense of shared identity is proposed. A multi-method analysis of qualitative, survey, and network data collected between 2003 and 2010 on a Latino/a business network in Ottumwa, Iowa, is utilized to test these predictions. Results showed that trust could be developed between Latino/a network members through a third party and a history of exchanges. While there is mixed support for the theory addressing the formation of a sense of “we-ness,” self-identification as Latino/a also increased trust between network members. Further, trust was found to be related to increased perception of business benefits, increased resource exchanges, and network sustainability. 1 CHAPTER ONE: NEW DESTINATIONS America’s racial and ethnic composition is shifting. With the end of the Bracero Program in 1964, legal and undocumented immigration from Mexico surged (Massey, Durand and Malone 2002). Upheaval in Cuba (1960s through the 1970s) and civil wars in El Salvador, Guatemala, and Nicaragua also spurred immigration of Latinos to the United States (Portes and Rumbaut 2006; Sánchez Molina 2008; Zarrugh 2007). The settlement patterns of these immigrants have also undergone major shifts. Since the 1990s, Latinos are moving into rural communities (called new destinations) in unprecedented numbers. This pattern of settlement has partially occurred because the increase in overall numbers has led to “immigrant niches” in areas where Latinos have traditionally settled (called gateway cities) becoming “saturated” making “labor-market opportunities in other areas seem more attractive” (Hirschman and Massey 2008: 3). New destination communities often lack the infrastructure to incorporate new residents (Griffith 1995; Guthey 2001; Kandel and Parrado 2006). Providing education, health care, and housing are just a few of the areas where these communities struggle to provide services to new residents. Research frequently focuses on these
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