Introduction

1Family firms are a major driver of economic prosperity and social integration in the United States. “The greatest part of America’s wealth lies with family-owned businesses,” according to the Family Firm Institute (FFI). They account for 80 to 90 percent of all US businesses, compared with 65 percent in the UK (FFI, 2010: 2 & 8). The US seems to be such a fertile ground for family firms that one would assume that ethnic families would also want to sow their seeds.

2This chapter reviews the literature on ethnic enterprise and family entrepreneurship as the necessary theoretical framework to show how culture and context may impact an ethnic family’s ability to create a business in the US and make it thrive. It examines to what extent the chosen sectors of activity, sources of financing, and transmission patterns imply ethnic-specific sets of motivations, values and ethics, or if there is an American way, irrespective of the background of entrepreneurial families, yet conducive to the development of an entrepreneurial society.

I. Theories and sources of ethnic and family entrepreneurship

3As early as the beginning of the 20th century, Max Weber (1930) explored the link between ethnicity and entrepreneurship in the United States, establishing a positive connection between capitalism and the Puritan work ethic. Yet, some of his ideas—such as his view that Confucianism and Taoism stymied Chinese entrepreneurship—were more recently put into perspective, and Ivan Light (1972) is seen as the initiator of the modern study of ethnic enterprise. He attributed the relative success of the Chinese in business to their suprafamilial social structure that guaranteed solidarity and commitment, and gave them access to cheap labor and their own source of finance, the rotating credit association. The middleman minority theory developed by Edna Bonacich (1973) saw ethnic entrepreneurs as distribution links which occupy a “middle” position socially, financially and economically between their co-ethnics and the culturally-dominant society. Culturalists built upon Geert Hofstede’s Value Survey Module (1980)—which later gave birth to the Chinese Value Survey (2001)—to identify the cultural traits which determine specific entrepreneurial models. Structuralists studied discrimination and entry barriers as factors that encourage self-employment. Others analyzed ethnic enterprise in terms of the push-pull factors, trying to see whether it is motivated by choice or by necessity (van Tubergen, 2005). Transnationalism—a term coined by Randolph Bourne (1916)—was also seen as creating certain favorable conditions that facilitate the entrepreneurial process.

4One of these conditions might be the presence of ethnic ‘enclaves’ (Portes, Guarnizo, Haller, 2002; Logan, Zhang, Alba, 2002) a term which replaced that of ‘clusters’ (which now applies to sectors of activity) and was coined by Alejandro Portes and Kenneth Wilson (Wilson, Portes, 1980). Portes and Wilson saw ethnic enclaves as positive environments fostering small business growth and self-employment. Their theory, based on a study of Cubans in Miami, has been repeatedly challenged over the years. Jimy Sanders and Victor Nee (2005) and Min Zhou and Mingang Lin (2005) emphasized the exploitative nature of entrepreneurs in ethnic enclaves and described the limits of ethnic solidarity. According to Light and Bonacich, the middleman minorities which “serve members of a different ethnic group than their own, often members of another oppressed community,” are the “antithesis of the ethnic enclave in which merchants serve coethnic customers” (Light, Bonacich, 1988). Roger Waldinger (1986) reformulated the theory contending that ethnic business growth depends both on local conditions as well as an ethnic predisposition for entrepreneurship.

5Most recent scholarly works (Dana, 2007)1, however, agree on one thing, the use of the word “ethnic”. It is preferred to the word “immigrant”—which would not include American-born entrepreneurs—and to the word “minority”—which would entail a comparison with a “majority” and does not insist on the common traits shared by a group. Most scholars put the spotlight on ethnic entrepreneurs and their immediate environment, and endeavor to determine whether they create social and human value for themselves, their community and the host country2.

6The topic of family firms has also been studied extensively. It has its own think tanks (e. g. The Family Firm Institute and the Cox Family Enterprise Center) and an academic publication, The Family Business Review, whose editor, Pramodita Sharma, has provided us with a comprehensive overview of the studies in the field (Sharma, 2004). Joe Astrachan—who was lead researcher on the 2007 American Family Business Survey is also an internationally-known expert.

7A very limited body of work, however, deals with ethnic family entrepreneurship as such and what is available is mostly focused on certain minority groups. Mark Granovetter’s theory of embeddedness (1995) and of “the strength of weak ties” (1973) seems to be particularly appropriate, as it could be assumed that the strong ties of a family can be combined with the weaker ties of an ethnic community.

8Some of the data and research published by The Migration Information Source (2006)3 is useful to assess to what extent entrepreneurial immigrants and their children can be compared to the dominant American culture, and to non-migrants of the same origin in their home countries.

9The U. S. Census Bureau publishes a Survey of Business Owners that provides statistics on minority-owned family firms by kinds of business and receipt sizes, but the broad categories used in the Census (Hispanic or Latino, white, black or African-American, American Indian and Alaskan native, Asian, native Hawaiian and other Pacific Islander) make it difficult to compare specific ethnic groups.

10The Small Business Administration, a valuable source with its Minorities in Business: A Demographic Review of Minority Business Ownership, is more detailed and gives data by country of origin. For instance, Asian-owned firms are broken up into Asian Indian, Chinese, Filipino, Japanese, Korean, Vietnamese, and other Asian. But it does not track family-owned businesses as an independent category.

11Hence, statistics abound, but are not as precise and granular as one might wish. They can also be misleading. For instance, Curtin and Reynolds (2008: 206) point out that “sole proprietorships often require considerable support and assistance from family and relatives and should be considered family businesses.” Besides, official data cannot account for undocumented entrepreneurs and moonlighting. Neither do they account for overlapping categories (such as black and Hispanic)—the same family being sometimes counted twice—or multiple business owners.

12Does a dominant entrepreneurship model emerge from the mosaic of ethnic family firms due to their embeddeness in what is said to be one of the most entrepreneurial societies of all?

II. The mosaic of ethnic family firms in the US

13The propensity to be in business with family members varies greatly from one ethnic group to the next. So do the chosen sectors of activity, business sizes, sources of financing, earnings, and survival rates.

14Ethnic families “are social outsiders who must compensate for the typical background deficits of their groups and the discrimination they encounter through their distinctive sociocultural resources” (Waldinger, 1993: 695). They have different levels of education, different English language skills, different financial resources, and different networks to give them a leg up, if any.

15They could be divided into two groups, those who immigrated or are the children of immigrants, and those who have deeper roots in the North-American continent even though they never fully integrated into mainstream society, namely African-Americans and American-Indians. The latter are less entrepreneurial than other minorities and those who do start a family business are much less successful at it than other Americans (Small Business Administration, 2007).

16Not every scholar believes that immigrants are more likely than the native born to be entrepreneurs. Neither is there a proven “relation between the rate of business formation in an immigrant group’s country of origin and their rate of formation in the United States” (Shane, 2008: 60).

17Yet most analysts claim that immigrants are highly entrepreneurial. Their motivations have been analyzed in terms of push-pull factors at two levels: (1) they left their home country because they were forced to and/or they went to the United States because they wanted to; (2) they started a firm because self-employment is the best course of action for upward mobility and/or they could not integrate the labor market at home.

18If we accept the premise that «to immigrate is an entrepreneurial act» (Herman, Smith, 2010: xxiii)4 it could then be assumed that family firms created by green-card holders and first or second generation Americans share certain characteristics irrespective of the ethnic origins of their founders. Yet there are few similarities.

19To account for the various ways family entrepreneurship is undertaken by different ethnic groups, this paper will adopt Waldinger, Aldrich and Ward’s framework (1990) and will try to analyze their opportunity structures, group characteristics and strategies.

II. 1. A common quest but various opportunity structures

20The opportunities that attract ethnic entrepreneurs can be broken into two categories based on whether they are group-specific or exogenous to the group. Ethnic enclaves belong in the first category. They are a natural magnet for newcomers, particularly the undocumented. They may provide advice, finance, and a pool of customers and labor for entrepreneurial families who do not master English perfectly and are not familiar with administrative procedures. They also make it easy for entrepreneurs to bring over relatives that they may exploit in what becomes a family firm (Sanders, Nee, 1987; Kwong, 1997; Zhou, 2005; Morales, 2008; Hollander, 2010).

21In all likelihood, a single entrepreneur arrives first, then brings over the spouse, children and possibly other relatives. There is a lack of longitudinal studies comparing different ethnic groups in terms of who comes first, how long it takes for the family to be reunited, and whether the family members that are brought over to the US systematically work in the family firm. The Mexican Family Life Survey (ongoing project) which gives “Data and Documentation on Migrants U. S.” has no equivalent for other ethnic groups.

22In the enclave, the entrepreneurial family can supply coethnics with products imported from the home country (ethnic produce and groceries, medicine, CDs and DVDs, etc.), but can also act as a middleman providing goods and services to outsiders.

23The second category includes the support systems provided by the U. S. federal and state governments to ethnic small businesses. They include the Minority Business Development Agency (MBDA), whose mission is “to foster the growth and global competitiveness of U. S. businesses that are minority-owned,”5 and the Small Business Administration (SBA) that targets mostly African-Americans and native Americans (Hollander, 2010: 205-206) and rules out green-card holders and undocumented entrepreneurs.

24Many for-profit and non-profit community development financial institutions (CDFIs) provide loans or technical assistance in low-income areas. They are financed by foundations, private organizations and the U. S. government. Microentrepreneurs can also borrow from microfinance institutions, such as Accion USA or Grameen America, or diversified lending and economic development organizations, like the Business Center for New Americans (BCNA), all of which serve those who would be most likely to fall prey to loan sharks, a common source of finance for Latinos in the home countries.

25But mostly the U. S. economy at large, its openness and business-friendly environment, its relative taste for ethnic goods and services, are the best boosters for ethnic family firms.

II. 2. Group characteristics

26Some of the large companies are controlled by minority families6. The bigger the size of the family firm, the less likely it is to have retained an ethnic identity, and the more likely it is to adhere to certain generally-accepted rules of governance. Group characteristics become more blatant in unlisted, small and medium-sized ethnic family firms. The most striking differences for ethnic family firms are what they consider to be family, how strong family ties are, and the relative importance of the community.

II. 2.1. Nuclear family, extended family and network

27Waldinger, Aldrich and Ward (1990: 144) write that “ethnic entreprise is a family mode of production”. But depending on the ethnic group, families can be monoparental, nuclear or extended. They may include grandparents, inlaws or even extend to other relatives. There may also be a hierarchy within the family, the eldest child being preferred over siblings, and the sons over daughters.

28Strong family ties have often been seen as a way to start and grow a business without being preyed upon by investors whose only purpose is profit. But they have also been seen as an impediment as predetermined values do not favor capitalism (Weber, 1930), or as the mutual trust shared by family members implies distrust for individuals who do not belong to the inner circle (Fukuyama, 1995). They also moderate the riskappetite which is said to be one of the bases of entrepreneurship.

29Bertrand and Schoar (2006), who explored efficiency-based theories for family firms around the world, have tried to measure the strength of family ties in terms of respect of the children for the parents and duty of the parents to the children, and found the two were correlated. They then tried to investigate the possible relation between family values and trust, and whether strong family values are a substitute for weak formal institutions. They found that a higher strength of family is associated with a lower number of listed firms (as a fraction of the total population). Family ties could “create efficiency distortions if they introduce nonmonetary objectives into the founder’s utility maximization that run counter to the optimal decisions for the business” (Bertrand, Schoar, 2006: 94). The authors conclude tentatively that “family values may play an important role in shaping the organization of businesses and their efficiency”. For example, ‘familism’, the preference for family members as partners or employees, may not only damage the bottom line, but also create conflicts with non-family staff. An extended family is likely to be both a heavier burden for ethnic entrepreneurs and a pool of cheap or unpaid labor.

30But family dynamics are not entirely determined by ethnic characteristics. Even when newly-arrived families stick to values and traditions, most women become more assertive when they settle in the U. S. (New American Media, 2009: 25-26). A very large majority of women in all ethnic groups share the decisions in terms of family finances, and many of them are entrepreneurial and own businesses (Ibid.: 27).

31Conflict may then arise from the fact that female entrepreneurs are more likely to have goals such as professional growth and self-fulfillment, instead of maximizing business sales or profits, than their male counterparts (Buttner and Moore, 1997; Cliff, 1998; Moore and Buttner, 1997).

32Research has noted the prevalence of husband-wife business teams in Korean immigrant businesses (Nam and Herbert, 1999; Yoon, 1991) and greater spousal involvement in decision-making (Shelton, Danes, Eisenman, 2008). As having a spouse heavily involved in business decision-making increases family tension, Korean-Americans experience greater family role demands than in a traditional male-dominated Korean family.

33Many family businesses are conducted in the home, which is likely to imply more unpaid participation from other members of the household. Being home-based might be either an advantage or an added problem for a family firm. Shelton, Danes and Eisenman found that Korean-American and Mexican-American business owners have significantly fewer home-based businesses than either Whites or African-Americans for firms of identical sizes. Thus, Korean-American and Mexican-American business owners, who tend to have larger households, experience greater family role demands. Interestingly, Shelton & al. saw no statistically significant differences in terms of family role demands for African-Americans and Whites.

34Weak family ties, however, can also have a negative impact on the creation, performance and survival of ethnic family firms. In 2007, 63.2% of black families were headed by single parents—compared to 26% for whites and 35.4% for Hispanics. That, added to discrimination, may explain why firms owned by African-American families are less successful. Census estimates indicate that black-owned firms have lower revenues and profits, hire fewer employees, and are more likely to close than white-owned businesses. Robert W. Fairlie and Alicia M. Robb analyzed data from the U. S. Department of Commerce, to try to determine whether racial differences in family business backgrounds may explain “why black-owned businesses lag substantially behind white-owned businesses in sales, profits, employment size and survival probabilities (Fairlie & Robb, October 2003: 1).” They suggest that the lack of a family entrepreneurship culture and parental role models may account for the low percentage of self-employment—only 3.8 percent of black workers are self-employed business owners, compared to 11.6 percent of white workers—among African-Americans.

35Working with family members can be either a question of duty or of self-interest, for partners have a better idea of how far they can trust each other. But higher trust for family members implies distrust for outsiders. Putnam (1995, 2000) and Fukuyama (1995) both stress the importance of trust in business. The latter believes that high-trust societies imply higher economic prosperity and claims that if trust is kept within the family circle, it limits firm expansion. But becoming a world player is not the ambition of, for instance, the Korean Mom-and-Pop grocery store. 74% of Koreans in a 1999 metro-Atlanta study employed family members (spouses, 48.9%; son/brother/sister, 4.6% each). 50.6% had unpaid family labor (spouses, 73.9%; children, 17.4%; parents, 6.5%; siblings, 2.1%), (Nam and Herbert, December 1999).

36The community adds its own advantages and constraints to those of the family. The type of trust that could be found within the family has to be added to the ‘bounded solidarity’ and ‘enforceable trust’ (Portes and Zhou, 1992; Portes, 1995; Portes 2007) that can be found at the level of co-ethnics, such as the weak links of guanxi for the Chinese (though it has been argued that guanxi creates strong ties). So do ethnic business communities stand to gain or lose, compared to non-ethnic family firms, from their embeddedness in the American business environment at large?

37Networks, which create an intricate pattern of mutual duty within a community, can be either beneficial or detrimental in terms of social capital. They are often seen as a key to the success of Asians, both in the enclave—because they imply trust and solidarity among co-ethnics—, and in their relationship with the mainstream economic activity—because they give strength in numbers to individual Asian firm owners. But they can also impose demands on entrepreneurs. Granovetter (2005) points out that, while affecting the flow and quality of information, social networks magnify the impact of both reward and punishment.

38Besides communities may be much more fragmented than may appear to the outsider, and there could be rivalry or even warfare between networks, such as those of Whenzhouese and Fujianese immigrants in New York City’s Chinatowns (Hollander, 2010). So belonging to a community, whose members can be trusted within the limits of guanxi, could amplify the degree of distrust in relation to the members of a rival community within the same ethnic group.

39Belonging to a specific community can be even more damaging when several ethnic groups share the same enclave. The presence of many Korean retail businesses in African-American neighborhoods has led to conflicts between the two groups, as evidenced by the 1992 Los Angeles riots in which African-Americans attacked and looted Mom-and-Pop Korean stores (Kwang, 1999).

40Whether solidarity within an ethnic community exists at all is another issue. Patrica Pessar (1995) found little of it among Hispanic immigrants in Washington, DC. Nor did it seem to be desired by these immigrants. Hence the belief that ethnic family firms may draw an advantage from belonging to a network may be exaggerated, if not mythical, for certain ethnic groups.

II. 2.2. Access to finance

41Key to the creation, growth and survival of the firms is access to finance. This depends in part on the willingness of banks to lend to minority-owned family firms, but also on the willingness of minorities to apply for the bank loans.

42Banks are not necessarily the first source of finance a would-be minority entrepreneur would think about. Many immigrants have a profound distrust of Main Street banks, which are often corrupt and whose deposits are not necessarily insured in their countries of origin. Some newcomers, such as Africans, whose home countries do not have highly developed banking systems, remain unbanked in the U. S. Dominicans, who have a tradition of using loan sharks in the Dominican Republic, continue to do so in the U. S. and accept to pay high interest rates. True, many ethnic banks—Chinese, Korean, Indian, Hispanic, etc.—can be found in ethnic neighborhoods, but they are far from being the only lenders.

43Networks, however, and the mutual trust they imply, can facilitate access to funds. In their 1999 study of Korean Immigrant businesses in metro-Atlanta, Young-Ho Nam and James I. Herbert (1999) gave the following breakdown for the sources of business capital: 34.4% from American bankers, 31.2% from family and relatives, 17.2% from personal savings, 7.5% from Korean bankers, and 5.4% from rotating credit and savings associations (ROSCAs).

44ROSCAs can help start and expand a firm. They are a substantial source of capital in the immigrant Korean community of Los Angeles. When Light and Bonacich wrote their 1988 study, there were at least 1,000 such associations (kye in Korean) in Los Angeles. They could not operate without the ‘enforceable trust’ mentioned by Portes and Zhou (1992) since they depend on the fear that one’s reputation within a community will be tainted. They are also a direct import from the country of origin and exist for some Africans, Haitians or Jamaicans, but not for African-Americans, which indicates again that group characteristics are determined by geography and cultural background, and not by race.

45The bigger the firm in terms of sales/receipts, the more likely it is to create social capital and be valuable to its community and American society at large. But this may depend on the initial investment. The access to finance is determined by how wealthy the family is and to what extent there is a culture of solidarity in a particular ethnic group. Haynes, Onochie and Lee (2008) found that Mexican-American small business owners relied less on their community than Korean-American small business owners.

46A key source of funds is the ethnic family firm’s founder personal assets and savings, as pointed out by Shane (2008) who found it to be the most likely source of start-up finance. According to him, the fact that African-Americans are less likely to have savings to invest in their firms, and are discriminated against by financial institutions, explains why entrepreneurship is quite rare in the black community (Shane, 2008, p. 138 and p. 143). It also implies that African American start-ups are undercapitalized. The low initial capitalization of the firms that do get started by African-Americans (57 percent of that of white-led new businesses) has a huge effect on their lackluster performance (Shane, 2008, p. 142; Bates, 1997).

47Fairlie and Robb (2010) agree that “Lower wealth levels are a barrier to entry for minority entrepreneurs,” which explains why Hispanic and African-American families start fewer businesses.

48All studies agree that minority-owned firms have more difficulty raising capital than others. Discrimination is not the only reason. According to Robert Fairlie (2006), the largest single factor explaining racial disparities in business creation rates are differences in asset levels. For instance, Navajo Indians do not own their land that is held in trust and administered by the Navajo Nation. So they have no collateral for bank loans and start very few firms (Hollander, 2008).

49Because ethnic family firms tend to be smaller than others, lower earnings could be explained either by the origins of the owners or by the sizes of the businesses. The Minorities in Business SBA Study (Small Business Administration, 2007: 2) found that proportionally the scale effect was less damaging than the racial effect for black-owned firms, whereas it was almost neutral for Asian-owned ones.

II. 2.3. Sectors

50The sectors of activity for ethnic family firms are highly correlated to the location of the business. The ethnic enclave will naturally offer a favorable environment for those firms that serve their community or for middleman firms that are business intermediaries between their co-ethnics and the mainstream economy. Granovetter (1985) contends that ethnic firms are more advantaged in difficult economic environments and in sectors with low barriers of entry and where trust, more than technical knowledge, is a scarce resource.

51Some sectors are more likely to imply participation of family members. Grocery store owners, for instance, often use full or part-time help from their spouses or children. So the sector, more than the ethnic origin, might explain a high percentage of family firm ownership. The choice of sector, however, is influenced by the ethnic origin of the family firm owner. Many New York grocery stores are owned and operated by Korean families. Asian Indian families own and manage 40% of hotels and motels.7 60% of American motels are owned by Gujarati Indians.

III. Choices and motivations

52Behind the percentages, there is a choice, that of being self-employed. Is that choice determined by the higher propensity of one particular ethnic group? Or could we assume that only the more entrepreneurial tend to leave their home country to immigrate? Analysts disagree. Yuengert (1995) claimed that higher self-employment rates in the immigrant’s country of origin correlate with higher self-employment rates among these immigrants in the United States. But Fairlie and Woodruff (2007) found that while there are low rates of Mexican immigrant business ownership in the U. S., Mexico has one of the highest business ownership rates in the world.

53And motivations and choices also differ depending on whether ethnic entrepreneurs immigrated or were born in the U. S. Shinnar & al. (2009) found that “U. S.-born Mexican entrepreneurs are more motivated by the individualistic financial benefits of being an entrepreneur, while Mexican immigrant entrepreneurs are more motivated by serving society and their co-ethnic community.” Many Koreans who were highly educated professionals in Korea went into the retail business when they settled in the U. S. According to Asian Nation,8

Among foreign-raised Asians, Koreans have the highest self-employment rate at almost 28%. When we count family members or relatives who work for Korean store owners, the rate of being directly involved in a family small business in one form or another is probably even higher than that.

54So is the entrepreneurial drive of families boosted by the economic environment of the U. S. and the fact that it is the proverbial Land of Opportunity? If such was the case, it seems that being steeped in U. S. culture would have the same effect on all minorities, and it does not.

55On the other hand, if entrepreneurship was part of a genetic inheritance, it would be passed on the next generation, which leads us to the issue of transmission. If a family firm is to survive, how are the assets transmitted to the next generation? Can and should the founders’ culture be maintained?

56The Family Firm Institute in Global Data Points (2012) tell us that only 30% of U. S. family-owned businesses survive to the second generation, 12% to the third, and 3% to the fourth, and that “19% of family business participants have not completed any estate planning other than writing a will.” But this is because ageing heads of family do not want to yield power, not because they anticipate the firm will die with them. In reality the survival of the firm matters to them. Yet that concern is not shared by Korean and Chinese family firms in the U. S. When polled in a 1999 survey in Atlanta, no more than 2.2% of Korean family business owners expressed the desire to see their firm survive to the next generation (Nam, Herbert, 1999: 345), and 81.5% had no formal written succession plan (Ibid.: 347). Having a family business for some Asians might be a stepping stone into American society. But once the children are educated, they may want to leave the business behind to integrate American society fully, an ambition that is not discouraged by their parents.

57Most studies, like that of Gold, Light and Johnson (2006), who call it the ‘classic model’, show that the U. S. born children of immigrants, who have a better command of the language and higher education attainment, tend to turn less to self-employment than their elders. The higher the education advancement of the first generation (that is, those who were not born in the United States), however, the more progress in terms of income and educational advancement their U. S. born children will demonstrate. The children of such immigrants as Mexicans, who entered the United States with less education, lag behind (Ibid.).

58As for the 1.5 generation (a. k. a., 1.5G), those who arrived as children or young teenagers, the younger a child is when he/she arrives in the U. S., the more likely he/she is to find an employer rather than work in the family firm. Like those who were U. S.-born, many 1.5G Chinese-Americans children become what Peter Kwong (1988) calls “Uptown Chinese” as opposed to their entrepreneurial “Downtown Chinese” parents who operate a family business in an ethnic enclave (Hollander, 2010).

59Yet Gold, Light and Johnston (2006) envisage other possibilities. For instance, members of the second generation, who have more assets than their parents who could not afford to start a business, may reveal higher rates of self-employment (historically, this pattern was observed among Jewish immigrants in New York).

60But is self-employment the right choice for an ethnic family? Profit is not necessarily prioritized and family welfare sometimes takes pride of place. But for lack of a family happiness index success could be measured in terms of receipt sizes.

61The percentage of family-owned businesses for all receipt sizes is highest for white families (23.4%). Asian family-owned businesses rank second with 22.1% and Black/African American last with 14.4%. But the higher the income of family firms, the lower the percentage of black owners (Survey of Business Owners, 2002).

62The most successful ethnic firms are those owned by Asian Indians. Together with the Chinese, they own 47% of all Asian-owned firms (Ibid. Asian-owned Firms 2002). Interestingly, Asian Indians have the highest educational attainment of all minorities, which seems to confirm George W. Haynes’(2010: 34) findings that high income and high wealth for small business households are less correlated to the race and origin than to the educational attainment of the owner (s)/founder (s) of the family firm.

63The least successful ethnic family firms, by all counts, are African-American. They are less profitable, have younger, less-experienced owners and are more highly leveraged. They are also proportionally less prevalent. Fewer (about 1 in 7) firms with black or African-American-owners are family-owned, compared to 1 in 5 firms with white owners (Fairlie, Robb, 2003). “Only 5.1 percent of business-owning households have a black head as compared to 12.7 percent of non-business owning households,” writes Shane (2008: 135).

64Once again, there are limits to how trustworthy statistics are when dealing with family firms. When respondents claim that their businesses are not family-owned, it does not mean they do not employ paid or unpaid family members, and is more of a reflection of whether the respondents considered the business was theirs or their family’s. This raises the question of whether the main decision-maker considers family members working in the business as partners or employees. Respondents in the Minority Business Survey could answer that their firm was “family-owned” or “single-owned”, depending on whether they had a “we” or an “I” identity.

Conclusion

65The presence of an ethnic factor in U. S. family entrepreneurship cannot be denied, even though accurate numbers are difficult to obtain due to overlapping categories, unreported or illegal business activities, and a culture of secrecy in certain ethnic groups. Families are the repositories of shared roots, traditions, and memories. Whatever the environment, family firms are more likely to retain some of their cultural identities than other types of businesses. True, once children of immigrant entrepreneurs have been educated in the U. S., many tend to cut the umbilical cord from the family firm. But more immigrants come, start family businesses, and contribute to the ethnic mosaic of American cities.

66The ethnic factor also manifests itself in the chosen sectors of activity, modes of financing, willingness to start a family business and transmit it, and performance, Asians ranking first and African-Americans last in terms of average business receipts.

67However, the scale effect is not to be mistaken for the racial effect. Because ethnic family firms tend to be rather small, some of their characteristics are more due to their sizes, than to the ethnic origins of their founders. Low savings and few assets force families to keep their firms undercapitalized, which determines business results. Ethnic family firms seem to be less profitable than others on the average, particularly when executives are chosen among relatives rather than among more talented outsiders.

68But ethnic groups are not similar in terms of trust and solidarity within their communities. Some rely on the strong ties of the nuclear or extended family, some on the weak ties of their networks—both of which have advantages and demands—, others seem to be ‘bowling alone’. For business decisions, ethnic families may achieve better consensus or suffer from irreconcilable conflicts. Immigrant entrepreneurial couples are particularly exposed as women become more emancipated when they settle in the U. S. than they were in their home countries. Disagreements are particularly acute when the business is home-based and the pressure of family problems is added to that of the business. The intermingling of family and work finances can help weather a rough patch, but it can also result in personal bankruptcy which will make it harder to rebound.

69In spite of the disparities, there is unquestionably an entrepreneurial American way that provides both economic wealth and social integration and makes up for an original form of social tie. It is difficult to pin down and is almost impossible to quantify, but it resides in part in the openness of American society, its demand for ethnic goods and services, its taste for change, and its tolerance for diversity. Indeed, an image, if not a common entrepreneurial frame of reference, emerges from the mosaic of American entrepreneurship practices, however diverse their ethnic motifs and patterns may be. And the very disparities contribute to the entrepreneurial spirit of the United States as a nation.