African American small business owners' attitudes toward business training.

The attitudes toward training courses are documented for the rapidly growing African American segment of small business owners. The study provides evidence supporting the training-business creation model suggested by the Small Business Act and by Becker's work on human capital. Over 700 responses to a mail survey were divided into African American small business owners and Caucasian American small business owners. The African American small business owners rated the training courses as

significantly more important than the Caucasian American small business owners for all 23 of the areas tested. A matched sample was created from the data set to evaluate the idea that demographics such as type of business and number of employees may have influenced the results. The findings from the matched sample were consistent with the findings from the total sample. Various reasons for these unusually strong results are offered as well as directions for future research.

Introduction

The number of African American business owners increased a dramatic 97 percent in recent years as the number of firms grew from 424,165 in 1987 to 823,499 in 1997 (United States Census Bureau 2002b). Though the growth is remarkable, African American owned businesses remain underrepresented in terms of the proportion of African Americans in the general population. In a 1997 survey, the United States Census Bureau estimated that African American businesses accounted for slightly less than 4 percent of the total number of firms (United States Census Bureau 2002b) whereas in another survey (United States Census Bureau 2002a), it was estimated that 12 percent of the population over the age of 18 were African American. Clearly, the percentage of African American firms is substantially less than the proportion of African Americans in the population. Therefore, variables that impact business ownership for this group are of special interest and may provide important insights into small business creation.

For some time, politicians have noticed a discrepancy between the African American population and the percentage of African American firms, as well as the general need for small business development in the United States. The United States Congress has taken actions to address this gap and to support the growth of small business. The Small Business Act (Public Law 85-536 as amended, see United States Small Business Administration 2001) was designed to encourage full and free competition, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment. Among other significant ideas, the act proposes a relationship between training courses and small business development that will be referred to in this paper as the training-business creation model. The training-business creation model posits that the actual and potential capacity of small business is encouraged, enhanced, and developed by the use of training. The goal of this paper is to investigate African American attitudes toward small business development training courses. Another purpose of this study is to provide indirect empirical support for the training-business creation model.

Theoretical Development and Literature Review

The training-business creation model proposes that training courses are one of the helpful (but not always necessary) conditions for small business development. Training refers to the transfer of information in a formal setting for the purpose of increasing human capital. In this study, training refers to courses on various aspects of small business maintenance, enhancement, and creation (and thus entrepreneurship) made available to the general public usually at no or minimal cost. Human capital refers to the knowledge, skills, and capabilities a person possesses (Becker and Murphy 2000; Becker 1993; Coleman 1988; Schultz 1981, 1971). In the entrepreneurship field, the two main variables that have been discussed as comprising human capital are education and experience (Chaganti and Greene 2002). The training courses provide a way to enhance the skills and knowledge base of the participants (thus adding to the existing human capital) so that the participants have an opportunity to become more productive and are better prepared to contribute to a business. The basic idea is that training courses increase the value of an individual to an organization. As people become more valuable, the value of an organization increases. Finally, the economy (as the sum total of the value of all of the organizations) grows. Similar approaches to small business development have been used in other countries. For example, in the United Kingdom, policy initiatives to increase the number of minority-owned businesses by providing support to these entrepreneurs include the offer of training in a variety of areas (Ibrahim and Galt 2003). The success of such initiatives provides international support for the training-business creation model. Yusuf and Saffu (2005) found that planning does not necessarily lead to increased performance, indirectly not supporting the training-business creating model. However, the situation they measured is unique because of the substantial economic turbulence in the country used as the sampling frame, Ghana, and as a result would not be comparable to firms in many parts of the world. Yet, using data from the same country, Tagoe, Nyarko, and Anuwa-Amarh (2005) noted how the lack of training in accounting and record keeping has limited small and medium-sized enterprises from being able obtain credit.

Another common manner in which small business owners gain knowledge, and hence human capital, is through social capital. Social capital can be defined as the asset of accumulated relationships among individuals, communities, or networks and the resultant learning (Nahapiet and Goshal 1998; Burt 1997; Walker, Kogut, and Shan 1997; Becker 1996; Coleman 1988). Training is also believed to be one method to increase the social capital of a group. If the individuals are exposed to training courses and then share the learned knowledge (human capital) with their community of family and friends, the social capital of their community of family and friends would be enhanced.

Training courses are not necessary to enhance small business development as the skills learned and information shared in a training class may be self-learned or learned from members of the community on a one-to-one basis. It has often been said that many small business owners often start learning about business as a child at their family's kitchen table. Yet for groups where there is a lack of small business ownership participation, such as with African Americans, the ability to transfer information in an informal situation may be very limited. This situation has been described as a lack of social capital. Hence, there is a need for training courses to increase human capital and aid in the creation of social capital for the development of business and in particular, African American owned businesses.

As a result of governmental and educational initiatives, the number of opportunities for African Americans to receive training and education for small business development has substantially increased over the last three decades. The number of academic courses and the associated enrollment in courses on small business and entrepreneurship has grown dramatically (Gartner and Vesper 1994). Concurrently, the Small Business Development Centers have substantially increased the availability of training courses and the number of sessions offered, resulting in many more clients being trained. There is ample support for the idea that training courses are very helpful, and in many cases, necessary to enhance small business growth.

With the substantial growth of African American participation in small business ownership, it is reasonable to assume an increase in their interest in training for small business. Becker (1996) and Becker and Murphy (2000) discuss how the anticipated utility from a particular object or set of objects would be the result of individual expectations combined with social capital from friends and families. Individual expectations are partially a result of human capital and individual predispositions. Individual predisposition refers to the unique choices that people make that are independent of human and social capital. For example, a choice may be a preference for green beans over green peas. Social capital reflects the expectations learned from friends, family, and the local community. These various expectations are combined to form attitudes. Therefore, the attitude toward an object reflects the expectations derived from individual predispositions, human capital, and social capital. So a highly rated object reflects a positive attitude from high (anticipated) utility based on the expectations from human and social capital and the individual predispositions.

Furthermore, building on this idea, it is proposed here that the attitude toward an object (or expected utility) for a group of people can be evaluated in part by considering the social capital of the group. For example, because there are fewer African American small business owners, it would be expected that the lack of social capital in the group would increase the importance of training courses assuming business development was an important goal of the group, whereas for Caucasian American small business owners who tend to have more social capital on small business development, such training courses would be viewed as less important. In this situation, both groups could rate the training courses as important, but African Americans are predicted to perceive the courses as more important than Caucasian Americans.

Another way of framing the same situation consistent with the previously mentioned approach is that if the expected benefits (marginal utility) from a training course were higher for one group than another, then the attitude toward the importance of the course would be higher in the former group than the latter. Because African Americans earn less money on average than Caucasian Americans, the investment in a training course, in terms of time, is more for Caucasian Americans than the same investment for African Americans. For example, an African American earns $10 an hour, whereas a Caucasian American earns $15. If the training course is eight hours long, that course world cost the African American $80, whereas the same course would cost the Caucasian American $120. However, the anticipated benefits for African Americans are greater as they can expect a larger increase in utility from owning a business than Caucasian Americans. In other words, if African Americans start their own business, they have the opportunity to earn as much money as Caucasian American business owners, but because African Americans generally start from a lower wage rate, they can expect greater resulting benefits. Therefore, the expected marginal utility from a training course would be higher for African Americans than for Caucasian Americans and therefore the attitudes toward training would be higher for African Americans than Caucasian Americans.

Additionally, the training-business creation model maintains that training leads to business creation. Becker (1993) has done a nonpareil job of theoretically and empirically documenting the impact of future earning on investments in education, especially for college degrees. He strongly demonstrates the value of the investment in education and the rational choice for such an investment in terms of discounted future earnings. In a similar vein, the consideration of the investment in training courses can be regarded differently by African Americans and Caucasian Americans. Because, in general, African Americans earn less than Caucasian Americans, the growth in income potential for African Americans is greater than the growth in income potential for Caucasian Americans. Therefore, one could predict that training courses will be viewed as more important to African Americans.

As stated earlier, minority business development has been a concern of government policymakers since the 1960s and special programs have been initiated to encourage minority business enterprise (Ibrahim and Galt 2003; United States Small Business Administration 2001; Doctors and Belletire 1973). The conceptual model assumed by policymakers is that training is necessary to encourage and aid in the creation of minority businesses. The published research in the area of training needs has been limited to relatively few articles with much of the content being descriptive and normative. Doctors and Belletire (1973) summarized the need for education and training as important missing components for African Americans in the development of business ventures. These authors expressed concern for the relative lack of business training for minorities and presented recommendations to correct the situation. Hence the relationship between training and new business creation has been assumed to be direct and positive, consistent with the work by Becker (1993). Based on their training and consulting experiences, Hefner and Jones (1973) identified specific concerns in training African Americans. In their paper, they also stressed the relative lack of training of African American business owners. Again, the same positive and direct relationship between training and new business creation was assumed.

Hollingsworth and Hand (1976) addressed the issue of how to successfully train individuals to be entrepreneurs. They used a sample of small business people categorized into Caucasians, African Americans, and Cubans. It was found that African Americans ranked lowest of the three groups in their perceived need for training. African Americans failed to recognize the importance of records and forecasting, and therefore planning, as integral parts of business success by failing to recognize the need for training; many members of this group may have blocked out help before it reached them (Hollingsworth and Hand 1976). This work extends the idea of the training-business creation model to include the concept of attitude toward training. Essentially, it states that attitudes toward training are related to the acceptance of training, hence influencing the participation in training and the impact of training. Other researchers have addressed the importance of training for minority groups with empirical research but did not report separate information on African Americans.

More recent studies have expressed the view that African Americans need more training (Mann 1990) and categorized the lack of training and role models as a deficiency of social capital (Fratoe 1988). On the other hand, Caucasian Americans have more social capital than African Americans due to more family business role models and more access to training and experience in family-owned businesses (Fratoe 1988). This is not surprising given the large percentage of small businesses owned by Caucasian Americans and the small percentage of such businesses owned by African Americans. African Americans have a greater need for training because of their lack of social capital. As already mentioned, there have been governmental efforts to train African Americans. Even though greater training opportunities exist for Caucasian Americans as well, their cache of social capital would likely remain something they continue to rely on given its production of success in the past, whereas African Americans would make the most of available training opportunities. Having been exposed to such training courses and consequently provided with new human capital they can connect directly to the training courses they have received, we expect that African Americans will have more positive attitudes toward such training.

Recent information suggests a change in the social capital of African Americans. In a report from the Kauffman Foundation (2002), it was stated that African Americans were 50 percent more likely to start a business than whites. Given the assumption that training is important in starting a business and that attitudes toward training reflect this belief, the Kauffman Foundation (2002) survey and the growth in the number of African American businesses provides evidence that African American attitudes toward training have changed since 1976.

As a result of the analysis of the literature, we hypothesize that African American small business owners will have more positive attitudes toward the importance of training than Caucasian Americans.

In the past, African American business owners have been described as having a negative attitude toward training (Hollingsworth and Hand 1976). The present study will document whether attitudes have changed. Understanding the attitudes toward training will aid educators, trainers, and consultants in the development of better offerings. Furthermore, the measurement of current attitudes will provide a benchmark for the future. The purpose of this study is to investigate the current attitudes of African Americans toward training and provide indirect evidence for the training-business creation model.

Research Design

Separate focus groups for the African American and Caucasian American small business owners were conducted to collect data on how training was perceived. The information from these groups was combined with information from in-depth conversations with small business development consultants. The combined data were used to create a set of questions. The questionnaire was then reviewed by a small business expert for content validity. In addition to demographic questions, the questionnaire was designed to measure attitudes toward 23 training areas (see Table 1 for a list of the 23 areas). The respondents were asked to rate the importance of the 23 training areas on a seven-point scale with 7 being of greatest importance. In pretests of the questionnaire, it was learned that the flow of the questionnaire would improve if the 23 training areas were divided into groups. As a result, the ad hoc categories of general background, organization processes, and general activities were created.

Four thousand questionnaires were mailed out. Three thousand names of potential respondents came from Small Business Development Centers' list of clients and 1,000 names came from a national list seller. All of the respondents were from one state. Using ideas from Dillman (2000), the designs of the survey instrument and the letter were carefully prepared. A prenotification postcard was mailed, then the questionnaire, and finally a follow-up postcard. The returned mail with bad addresses was used to identify and remove the individuals from the original list, reducing the effective original sample to 3,009. A total of 924 people responded, for a response rate of 30 percent. It is a strong possibility that we were not notified of all of the bad addresses, so the 30 percent response rate could be a low estimate. Of the 924 individuals who did respond, only 790 were used for further analysis because some respondents did not answer the classification question or did not fall into one of the two groups of interest.

Results

Table 1 includes the means, standard deviations, and ranks for the total sample. The results show that the training area of most interest (a rank of one) was complying with regulations and taxes whereas the area of least interest (a rank of 23) was electronic commerce. Cash/flow management, accounting/bookkeeping, and financial relationships had high ranks of two, three, and four, respectively, showing strong interest. Advertising, initial processes and procedures, and marketing were ranked five, six, and seven, respectively, also showing fairly strong levels of interest. Feasibility analysis, production processes, and inventory control were tied and ranked just above the lowest ranked area, electronic commerce, indicating much less interest in these topics.

The profile for the whole sample is helpful, but it does not tell us if there are any differences between African Americans and Caucasian Americans. Table 2 contains the means, standards deviations, and ranks for the African American sample of 421 and the Caucasian American sample of 369. A series of t-tests for the difference between the African American and Caucasian American groups have the unusual finding of all 23 variables being significantly different at the 0.01 level. This finding is so strong it seems worth repeating. In each of the training areas tested, African Americans rated that area as being significantly more important than the Caucasian Americans at the 0.01 level. A review of the ranks indicates that though there are some differences in the ranks, generally the ranks were similar.

The differences between the two groups may be a reflection of external variables that are correlated with attitudes toward training. For example, there may be differences in the attitude toward training based on the type of business. The size of the business is defined by the number of employees. In our sample, the average size of African American businesses is much smaller than that of Caucasian American businesses (an average size of 1.21 compared to 1.75, as can be found in Table 3). This difference is substantial (significantly different at the 0.001 level) and this difference may at least partially explain the results. The question is if this external variable or others had any effect on the results. Riding and Swift (1990) have presented one approach for addressing this question when they analyzed female terms of credit. Using men as a control group (as we are using the Caucasians), they created a sample of men and women matched on demographic variables that they reasoned may be important external factors. The general idea is that the bias that may be present will be removed by using the matched sample. This procedure substantially reduces the sample size as not all respondents can be paired. It was decided to pair the individual African Americans with the individual Caucasian Americans to remove bias that may have entered the analysis from different numbers in the categories of the demographic variables. The variables of age of business, type of business, number of full-time employees, and age of the respondent were use to create paired observations for the two groups (see Table 3 for a list of these four questions and their means and standard deviations). The correlations between these four variables can be found in Table 4. The correlations indicate that the number of employees is significantly correlated with the other three variables. The results from the paired sample can be found in Table 4. The sample size dropped from 790 to 298 with a respectable 149 observations in each group. In the significance tests of the matched sample, the sample sizes varied slightly as some observations were lost due to missing data. However, the sample sizes were similar enough that running the tests was acceptable. Interestingly, the results (Table 5) again supported the idea that African Americans rated training as more important than Caucasian Americans, with each of the 23 variables being significantly higher at the 0.05 level than the prior finding of all the attitudes being different at the 0.01 level. In both statistical analyses, the results are extraordinary. Again, the rankings of the means within each group were not identical, but were generally similar.

Discussion

African Americans are disproportionately underrepresented as small business owners, yet the growth rate of African American small business is phenomenal. Therefore, using the theoretical frameworks of human capital and social capital in the context of the training-business development model, we analyzed attitudes toward training courses to identify any changes in African American attitudes toward training. We hypothesized that attitudes of African Americans would be more favorable toward training compared to past studies and compared with the attitudes of Caucasian Americans. Our results indicate a significant positive change in African American attitudes toward business training. In addition, the results provide indirect support for the training-business creation model, which says that training leads to business creation.

These results are clearly in line with the massive growth in African American owned businesses (United States Census Bureau 2002b) and the findings of the Kauffman Foundation (2002). The idea that African Americans rate training as more important than Caucasian Americans suggests that African Americans value training most likely because they perceive such training would or has helped them be successful in their businesses. To the extent that perceived importance of training leads to training and that training leads to new business creation, then African Americans should continue to create new businesses at a rapid rate. The interest, to some extent, may reflect pent-up demand for new business creation (but we did not measure this aspect).

Additionally, these empirical findings support the idea that the change in attitudes toward training is associated with the creation of new business ventures and the desire to create new businesses in general. Therefore, the findings provide indirect evidence supporting the training-business creation model.

The findings were much stronger than expected. Therefore, it is appropriate to recognize other possible explanations for these findings. One explanation may be acquiescence response bias. One group may rate all items lower or higher such that the scores reflect a yes-saying (responding positively) or nay-saying (responding negatively) tendency regardless of the items' content (Nunnally and Bernstein 1994; Paulhus 1991). For example, if African Americans felt a higher rating was desired and they as a group were more compliant (than Caucasian Americans), a higher rating on course importance would be expected. Future research should take steps to reduce the possibility of response bias. One approach to controlling for acquiescence response bias is during the development of the survey instrument, by utilizing items that are balanced in the direction of wording and by using conceptual opposites (Nunnally and Bernstein 1994; Paulhus 1991). A second explanation is that these findings may be a simple empirical regularity for which we have no theoretical model. Ehrenberg (1995) writes that empirical regularities are potentially important sources for theory development.

Future research should focus on other variables that could be related to the upsurge of African American small businesses. Is there pent-up demand for new business creation in this group? Are more training opportunities resulting in African Americans finding training to be so important? Do Caucasian Americans viewing training as less important as African Americans because they have greater social capital or for other reason? What is the specific relationship between training and new business creation for different groups? Though this paper discussed the relationship at a general level, the specific form and weight of the relationship was not explored.

In addition, this study represents a snapshot at a single point in time. It does not provide the quality of evidence that could be obtained from a longitudinal study. These strong and interesting findings generate numerous questions. We hope that the results of this study stimulate research on the numerous questions the results bring to bear.

References

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Becker, G. S., and K. M. Murphy (2000). Social Economics. Cambridge, MA: The Belknap Press of Harvard University Press.

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Dillman, D. (2000). Mail and Internet Surveys: The Tailored Design Method, 2nd ed. New York: John Wiley & Sons.

Doctors, S. I., and M. Belletire (1973). "Education and Training: The Missing Ingredient in Miority Capitalism," Journal of Small Business Management 11, 11-16.

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Gartner, W. B., and K. H. Vesper (1994). "Experiments in Entrepreneurship Education: Successes and Failures," Journal of Business Venturing 9(3), 179-187.

Hefner, J. A., and J. Jones (1973). "Training Blacks in Small Business Management," Journal of Small Business Management 11, 17-20.

Hollingsworth, A. T., and H. H. Hand (1976). "Educational Guidelines for Successful Black, White, and Cuban Entrepreneurs," Journal of Small Business Management 14(2), 31-38.

Ibrahim, G., and V. Galt (2003). "Ethnic Business Development: Toward a Theoretical Synthesis and Policy Framework," Journal of Economic Issues 37(4), 1107-1119.

Kauffman Foundation (2002). "Minorities More Likely to Attempt to Start a Business than Whites," http://www.emkf.org (accessed September 24, 2002).

Mann, P. (1990). "Nontraditional Business Education for Black Entrepreneurs: Observations from a Successful Program," Journal of Small Business Management 28(2), 30-36.

Nahapiet, J., and S. Goshal (1998). "Social Capital, Intellectuual Capital, and the Organizational Advantage," Academy of Management Review 23(2), 242-266.

Nunnally, J. C., and I. H. Bernstein (1994). Psychometric Theory, 3rd ed. New York: McGraw-Hill.

Paulhus, D. L. (1991). "Measurement and Control of Response Bias," in Measures of Personality and Social Psychological Attitudes, Vol. 1. Eds. J. P. Robinson, P. R. Shaver, and L. S. Wrightsman. San Diego, CA: Academic Press, 17-59.

Riding, A. L., and C. S. Swift (1990). "Women Business Owners and Terms of Credit: Some Empirical Findings of the Canadian Experience," Journal of Business Venturing 5, 327-340.

Schultz, T. W. (1971). Investment in Human Capital. New York: The Free Press.

______ (1981). Investing in People. Berkeley: University of California Press.

Tagoe, N., E. Nyarko, and E. Anuwa-Amarh (2005). "Financial Challenges Facing Urban SMEs under Financial Sector Liberalization in Ghana," Journal of Small Business Management 43(3), 331-343.

United States Census Bureau (2002a). "Profile of General Demographic Characteristics: 2000 Geographic Area: United States," http://www.census.gov.

______ (2002b). "Economic Census of Minority-and Women-Owned Businesses, 1987 and 1997," http://www.census.gov.

United States Small Business Administration (2001). "Small Business Act," http://sba.gov/regulations/sbaact/sbaact.pdf.

Walker, G., B. Kogut, and W. Shan (1997). "Social Capital, Structural Holes, and the Formation of an Industry Network," Organizational Science 8(2), 109-125.

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Warren Martin is a professor, Department of Management, Marketing and Industrial Distribution, University of Alabama at Birmingham.

Barbara A. Wech is assistant professor, Department of Management, Marketing and Industrial Distribution, University of Alabama at Birmingham.

John Sandefur is owner and manager, Computer Builders Warehouse, Hoover, Alabama. John is former director of the Alabama Small Business Development Consortium, University of Alabama at Birmingham.

Ruming Pan is a Ph.D. student, Health Administration program, University of Alabama at Birmingham.

Address correspondence to: Warren Martin, Department of Management, Marketing, and Industrial Distribution, School of Business, University of Alabama at Birmingham, Birmingham, AL 35294-4460. E-mail: wmartin@uab.edu.

Table 1 Total Sample Means (Ranks) and Standard Deviations (a)

                                      Mean (Rank)  Standard Deviation

General Background
Feasibility Analysis                  4.76 (20)    2.14
Competitive Analysis                  4.87 (16)    2.07
Strategic Planning                    5.29 (10)    1.96
Location Decision                     4.87 (18)    2.20
Pro Forma Financial Analysis          4.93 (12)    2.06
Financial Relationships               5.46 (4)     1.92
Loan Application                      4.93 (12)    2.28
Obtaining Business Licenses           4.88 (15)    2.26

Organization Processes
Initial Processes and Procedures      5.43 (6)     1.85
Cash Flow Management                  5.68 (2)     1.84
Accounts Receivable Management        5.36 (8)     1.96
Accounting/Bookkeeping                5.64 (3)     1.80
Production Processes                  4.76 (20)    2.13
Inventory Control                     4.76 (20)    2.18
Purchasing                            4.89 (14)    2.15

General Activities
Electronic Commerce                   4.31 (23)    2.19
Marketing                             5.41 (7)     1.96
Advertising                           5.44 (5)     1.90
Sales                                 5.35 (9)     2.01
Complying with Regulations and Taxes  5.78 (1)     1.76
Government Procurement                4.79 (19)    2.25
Managing Technology                   4.87 (16)    2.08
Business Performance Measures         5.17 (11)    1.97

(a) The question that was presented to the respondents was: For each of
the following areas, please indicate how important it was to obtain
assistance in starting your business on a 1 to 7 scale with 7
representing the greatest importance. n = 790.

Table 2 African American and Caucasian Sample Means (Ranks) and Standard
Deviations (a)

                              African Americans         Caucasians
                              n = 421                   n = 369
                              Mean       Standard   Mean       Standard
                              (Rank)     Deviation  (Rank)     Deviation

General Background
Feasibility Analysis          5.22 (22)  2.02       4.23 (19)  2.16
Competitive Analysis          5.27 (19)  1.96       4.40 (12)  2.09
Strategic Planning            5.72 (8)   1.86       4.40 (12)  2.09
Location Decision             5.33 (16)  1.98       4.34 (16)  2.32
Pro Forma Financial Analysis  5.42 (12)  1.98       4.38 (15)  2.02
Financial Relationships       5.73 (6)   1.87       5.15 (4)   1.94
Loan Application              5.27 (19)  2.19       4.52 (11)  2.31
Obtaining Business Licenses   5.41 (13)  2.14       4.27 (18)  2.25

Organization Processes
Initial Processes and         5.80 (5)   1.71       5.00 (7)   1.92
  Procedures
Cash Flow Management          5.89 (2)   1.78       5.43 (2)   1.89
Accounts Receivable           5.62 (9)   1.90       5.04 (5)   1.99
  Management
Accounting/Bookkeeping        5.89 (2)   1.72       5.35 (3)   1.85
Production Processes          5.31 (17)  1.97       4.12 (21)  2.14
Inventory Control             5.29 (18)  2.04       4.15 (20)  2.19
Purchasing                    5.38 (14)  2.01       4.31 (17)  2.16

General Activities
Electronic Commerce           4.71 (23)  2.14       3.85 (23)  2.17
Marketing                     5.77 (6)   1.83       4.98 (8)   2.02
Advertising                   5.84 (4)   1.71       4.97 (9)   2.00
Sales                         5.58 (10)  1.96       5.09 (6)   2.04
Complying with Regulations    5.95 (1)   1.75       5.58 (1)   1.75
  and Taxes
Government Procurement        5.34 (15)  2.07       4.12 (21)  2.29
Managing Technology           5.27 (19)  2.03       4.40 (12)  2.04
Business Performance          5.56 (11)  1.88       4.71 (10)  1.98
  Measures

(a) All the variables tested were significantly different between the
two groups at the 0.01 level using a t-test of means.

Table 3 The Questions Used to Match the Sample Members

                                                     African-
                                          Standard   Americans'
Question                            Mean  Deviation  Mean

How Long Your Business Has Been in  3.73  1.52       3.84
Existence
_1 Less Than one Year
_2 1 Year or More But Less Than 2
   Years
_3 2 Years or More But Less Than 5
   Years
_4 5 Years or More

What Type of Business Do You Have?  2.15  1.086      2.14
_1 Retail
_2 Service
_3 Wholesale
_4 Manufacturing
_5 Construction

Number of Full-Time Employees       1.53  1.079      1.21
_1 1 to 5
_2 6 to 10
_3 11 to 25
_4 26 to 50
_5 51 to 100
_6 101 to 500 or more

Your Age                            3.40  1.094      3.30
_1 Less than 25
_2 25 or Older But Less Than 35
_3 35 or Older But Less Than 45
_4 45 or Older But Less Than 55
_5 55 or Older But Less Than 65
_6 65 or Older

Ethnicity                           1.53  0.50
Caucasian
African American                                     2.00

                                    Standard   Caucasians  Standard
Question                            Deviation  Mean        Deviation

How Long Your Business Has Been in  1.65       3.61        1.36
Existence
_1 Less Than one Year
_2 1 Year or More But Less Than 2
   Years
_3 2 Years or More But Less Than 5
   Years
_4 5 Years or More

What Type of Business Do You Have?  1.02       2.16        1.14
_1 Retail
_2 Service
_3 Wholesale
_4 Manufacturing
_5 Construction

Number of Full-Time Employees       0.696      1.75        1.22
_1 1 to 5
_2 6 to 10
_3 11 to 25
_4 26 to 50
_5 51 to 100
_6 101 to 500 or more

Your Age                            1.05       3.51        1.13
_1 Less than 25
_2 25 or Older But Less Than 35
_3 35 or Older But Less Than 45
_4 45 or Older But Less Than 55
_5 55 or Older But Less Than 65
_6 65 or Older

Ethnicity
Caucasian                                      1.00        0.00
African American                    0.00

Table 4 The Correlation of the Questions Used to Match the Sample
Members

                     Age of    Type of   Number of
Variable             Business  Business  Employees  Age of Owner

Age of Business      1.00      0.05      0.22 (a)   0.03
Type of Business     0.05      1.00      0.20 (a)   0.04
Number of Employees  0.22 (a)  0.20 (a)  1.00       0.12 (a)
Age of Owner         0.03      0.4       0.12 (a)   1.00

(a) Significant at the 0.05 level.

Table 5 African American and Caucasian Paired Sample Means (Ranks) and
Standard Deviations (a)

                             African Americans         Caucasians
                             n = 149                   n = 149
                             Mean       Standard   Mean       Standard
                             (Rank)     Deviation  (Rank)     Deviation

General Background
Feasibility Analysis         5.15 (19)  1.928      3.71 (21)  2.194
Competitive Analysis         5.11 (20)  1.928      3.92 (18)  2.119
Strategic Planning           5.65 (4)   1.831      4.51 (10)  2.051
Location Decision            5.16 (17)  1.978      3.87 (19)  2.303
Pro Forma Financial          5.23 (14)  1.991      4.07 (15)  1.957
  Analysis
Financial Relationships      5.65 (4)   1.925      4.84 (5)   2.095
Loan Application             5.00 (22)  2.261      4.18 (12)  2.391
Obtaining Business Licenses  5.34 (12)  2.157      4.16 (13)  2.206

Organization Processes
Initial Processes and        5.54 (8)   1.812      4.65 (9)   2.060
  Procedures
Cash Flow Management         5.70 (3)   1.922      5.12 (3)   2.121
Accounts Receivable          5.45 (10)  1.985      4.91 (4)   2.179
  Management
Accounting/Bookkeeping       5.84 (2)   1.769      5.32 (2)   1.970
Production Processes         5.16 (17)  1.993      3.81 (20)  2.149
Inventory Control            5.18 (16)  2.021      3.65 (23)  2.244
Purchasing                   5.28 (13)  1.954      3.93 (17)  2.226

General Activities
Electronic Commerce          4.44 (23)  2.203      3.67 (22)  2.221
Marketing                    5.58 (6)   1.900      4.81 (6)   2.131
Advertising                  5.56 (7)   1.864      4.75 (8)   2.204
Sales                        5.40 (11)  2.036      4.81 (6)   2.221
Complying with Regulations   5.95 (1)   1.738      5.50 (1)   1.912
  and Taxes
Government Procurement       5.21 (15)  2.050      4.06 (16)  2.381
Managing Technology          5.11 (20)  1.099      4.14 (14)  2.148
Business Performance         5.53 (9)   1.867      4.43 (11)  2.061
  Measures

(a) All the variables tested were significantly different between the
two groups at the 0.05 level using a t-test of means.