Emergent Entrepreneurs: Latina-Owned Businesses in the Borderlands

Ethnic enterprises and minority small businesses grew at an unprecedented rate in recent years. Much of this growth spurt was fueled by the growing numbers of women-owned businesses. These businesses increased by 103 percent during the period 1987-1999,1 and Latina-owned business accounted for a large

Latinas, in fact, are entering the entrepreneurial market in record numbers. During the 1990s, the number of Latina small businesses grew by an extraordinary 209 percent, compared to the overall growth of Latino businesses in the United States.2 Estimates from 2002 show more than 470,000 Latina-owned businesses in the United States. These privately-held, majority-owned businesses accounted for $29.4 billion in receipts and employed nearly 198,000 workers. Contradicting the stereo-type of the submissive, silent Latina who plays an invisible and service-oriented role in mainstream society, these data instead suggest that Latina businesswomen are a growing economic force in the United States in general and in the borderlands in particular.

Research shows that growth rates for Latina entrepreneurs and microentrepreneurs are related to factors unique to the Latino community. What are these factors? And how can this economic growth be facilitated along the U.S.-Mexico border?

Profile of a Latina Entrepreneur

The Latina business and microbusiness owner profile differs from that of other women business owners in the United States. Compared to white and African American women business owners, Latina entrepreneurs are older, less educated, with more dependent children.3 In addition, the growth rates for Latina entrepreneurs and microentrepreneurs are related to factors unique to the Latino community in the United States and do not appear as significant factors in surveys of other female ethnic entrepreneurs. For example, Latina entrepreneurs cite family involvement in business activities as an important feature of business ownership, and, in fact, Latina-owned businesses are more likely than any other women-owned businesses to involve family members.

In 2000, the National Foundation for Women Business Owners (NFWBO) conducted a survey of 404 women randomly drawn from several listings of Latina business owners and reported some intriguing demographic and cultural factors influencing Latina entrepreneurs.4 The most compelling features of Latina-owned businesses were the emphasis on "cultural capital"5 (bilingualism and biculturalism), and the role of family in owning and running a business. The survey reported that 75 percent of Latinas indicate that family members help run their businesses, compared to Native American women (66 percent), white women (71 percent). African American women (55 percent), and Asian American women (64 percent). For Latina entrepreneurs, family forms the basis of a support system that includes financial/banking advice, managerial counsel, expansion planning, and overall entrepreneurial decision making.

Forty-four percent of Latina small and microbusiness owners rely on personal, family, and pseudo-kin ("comadres and compadres") resources to start up their enterprises, and 55 percent did not borrow capital or financial resources at all. The national survey and evidence from ethnographic surveys conducted in San Antonio indicate that Latinas rely more on previous experiences by male relatives, spouses, and extended family as resources for starting up and expanding their businesses than do their African American, white, Asian, and Native American counterparts. Further, many of the Latina entrepreneurial activities are culturally dictated and seasonal. These often home-based activities play a significant role in passing on entrepreneurial skills, as well as social and cultural capital, to younger family members and in keeping supplemental entrepreneurial earnings within the community. These data suggest a more firmly entrenched continuum of the Latino family cohesiveness in terms of economic survival and collective economic action of the family unit regardless of gender roles.

Business in the Borderlands

Certainly the remarkable growth in the number of Latina entrepreneurs has had an economic impact in Texas, as well as in other states along the U.S.-Mexico border. The increase in numbers of Latina-owned businesses between 1997 and 2002 was accompanied by increases in non-employer businesses along the border and therefore, overall growth in the numbers of Hispanic-owned businesses.6 The states where Latina businesses comprise the greatest share of all women-owned firms are New Mexico (20 percent). Texas (18 percent), California (17 percent), Florida (16 percent). New York (14 percent), and Arizona (13 percent).7 In Texas, New Mexico, Arizona, and California. Latina-owned businesses saw a rapid rise in 2002, both in numbers of new establishments (266,872) and in receipts, which totaled $16.8 billion (more than half of the total $29.4 billion for all Latina-owned businesses in the United States.) The following table charts this growth in the border states.

Even as the rate of change in generating new jobs has declined for Latina business owners, the rate of change for the self-employed along the U.S.-Mexico border has increased significantly. With substantial increases in self-employment in McAllen and Laredo metro areas. Texas leads the border states in this rate of change.8

Although represented in many economic sectors, Lutina firms remain concentrated in the service sector. (See figure on page 6). However, their greatest gains have recently been in industries where they previously were not represented, such as construction and communications.9 This is especially so in the border region.

Central Issues

Of the approximately 6.5 million residents living in the twenty-nine counties contiguously situated along the U.S.-Mexico border, 3.1 million self-identify as Latino and a large portion of this population is Mexican origin. The historical and cultural ties with Mexico that are evident in borderlands language, culture, and daily economic activity, create a unique transnational environment for these Latino families. The diversity of family arrangements along the border, in metro areas and also in rural ethnic enclaves like colonias (unincorporated townships), tells an interesting story of economic mobility that depends upon extended family resources and on learned economic survival strategies that similarly depend upon family and community resources.

The pattern of low educational attainment rates resulting in low earnings and low median household and family income is stark for Latino families living along the U.S.-Mexico border, especially those in Texas. The number of Latino families with incomes between zero and $15,000 is substantial in Texas (24.5 percent), and more than 58.7 percent of families report incomes in the zero to $35,000 range.10 The rate of poverty incidence is higher in Texas but also pressing in New Mexico and Arizona. Since the passage of the Welfare Reform Act of 1996, public cash assistance has declined and the percentage of families receiving public aid is considerably lower than the incidence of families experiencing economic hardship.

These stressful economic conditions generally encourage informal economic activity and observably, this occurs with a high degree of frequency along the U.S.-Mexico border. The key to harnessing informal economic transactions is to create a network of supportive microbusiness services housed in community-based organizations (CBOs) that recognize the importance of culture in the delivery of services. These organizations, such as community development corporations, community development financial institutions, and community development housing organizations, are critical in the transitioning of informal business activities into microenterprises. In order to facilitate these transitions, CBOs must demonstrate an understanding of the manner in which many informal economic activities driven by cultural factors occur in Latino communities and engage with these communities as full partners in program design, implementation, and service outreach.

As government support for social services continues to be reduced or dismantled, microbusinesses will increasingly substitute for the scarcity of public assistance, supplement family income, and create additional earnings opportunities for struggling families.11 As noted, Latina entrepreneurship is tightly intertwined with cultural roles and enhances family economic resources within the context of the unique transnational economic environment of the border region. Latina entrepreneurs, in combination with culturally competent CBOs, can build on the remarkable growth of Latina businesses of the last ten years and become a key component in reducing the incidence of poverty in the borderlands and in retaining earnings within the Latino border community.