Measuring Ethnic Community Involvement: Development and Initial Testing of an Index

Abstract

All rights reserved in all countries. Translation or reproduction of this document in any form whatsoever is prohibited. The authors of texts published in the Rogers – J.A.-Bombardier Chair of Entrepreneurship Working Paper series are solely liable for their contents. ABSTRACT: This paper builds on the work of Chaganti and Greene (2002) who distinguish between ethnic minority entrepreneurs/small business owners who are very involved with their ethnic community and those who are not. We extend their work by developing an Index of Ethnic Community Involvement based on personal but also business characteristics. We utilize a large sample size (698 interviews with entrepreneurs), drawn from five ethnic groups and develop a valid and reliable (.69) Index of Ethnic Involvement (IEI) with a strong emphasis on Social Capital Theory. Our initial analysis shows the IEI predicts some personal and business characteristics. Future development will include building regression models to predict business outcomes. The IEI, when fully developed, promises to be useful for targeting assistance, education and training programs and policy initiatives for entrepreneurs and small business owners according to the level of ethnic community involvement. In North America and other countries with high current or historical immigration levels, it is important to consider the effect of ethnicity in relation to current and potential entrepreneurs and small business owners. A recent article in The Journal of Small Business Management discussed the confusion around the terms ethnic entrepreneur, ethnic minority entrepreneur, and immigrant entrepreneur. The authors (Chaganti and Greene 2002), then provided an insightful and novel measure by which we could enhance our research about ethnic entrepreneurs/small business owners. They utilized personal characteristics to measure the degree of ethnic community involvement, indicating that the issues relevant to an ethnic minority entrepreneur with high levels of community involvement would be very different from those with a lower level of involvement. Building on their work, we have developed an Index of Ethnic Involvement and performed initial testing with a large sample size of ethnic entrepreneurs. Several theoretical perspectives have been adopted for studying ethnic entrepreneurs. Recent reviews of ethnic entrepreneurship have focused to some extent on social capital theory. For example, Butler and Greene's (1997) review of ethnic entrepreneurship, highlighted " the importance of a community dimension inherent in the business creation process " and the " significant contributions of community resources to the entrepreneurial activities of group members " (281). Deakins' (1999) concluded from his …

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