Index and Abstracts
for Volume 1, 1996
Volume 1, Number 1
Spring/Summer 1996
The Financial Needs of Black-owned Businesses
Timothy Bates
Rejoinder: Toward a Broader Understanding of the
Needs of African American Entrepreneurs
Salome Raheim
Reply to Raheim
Timothy Bates
Microenterprise Programs and Women:
Entrepreneurship as Individual Empowerment
Lisa J. Servon
Putting Government's Role in Perspective: The Impact
of Government Programs on Entrepreneurs and Small Business Owners
Edward G. Rogoff and Myung-Soo Lee
The Impact of Affirmative Action Set-Asides on Small Businesses: The Adarand
Decision
Delaney J. Kirk, Geralyn McClure Franklin, and Robert K. Robinson
Evaluating Microenterprise Programs: Issues and
Lessons Learned
Salome Raheim, Catherine Foster Alter, and Donald Yarbrough
Towards understanding the Developmental Outcomes of
Government Intervention: A Dynamic-Comparative Case Study of the Community Reinvestment
Act
Susan J. Fox-Wolfgramm
Declaration and Plan of Action
The Microcredit Summit
Timothy Bates
Author's note: Timothy Bates is Professor of Labor and Urban Affairs and Economics at
Wayne State University. Research reported in this study was conducted, in part, at the
U.S. Bureau of the Census Center for Economic Studies. Findings expressed are those of the
author and do not necessarily reflect views of the U.S. Bureau of the Census. Financial
assistance from the Woodrow Wilson Center International Center for Scholars supported this
study.
Abstract: The human capital gap separating black American and nonminority
small-business owners has rapidly narrowed in recent years but the financial capital gap
has narrowed slowly. Looking solely at owners using debt to finance small-business
creation, for example, average loan sizes were $51,700 and $25,073, respectively, for
whites and blacks. Limited access to financial capital stunts the black business community
in three ways: 1) some potential entrepreneurs never take the plunge because they are
unable to finance adequately their planned business venture; 2) inadequate capitalization
depresses firm size; 3) poorly capitalized firms are more likely to go out of business
than cohort small businesses. Financial capital and human capital are complements in the
small business realm, not substitutes. Many who enter self-employment lack the human
capital and financial resources that typify successful business creations; their chances
of survival are low.
Key words: Small business capitalization and race, small business failure, financial
capital and human capital requirements.
Salome Raheim
Author's note: Salome Raheim is Assistant Professor of Social Work at the University of
Iowa and co-author of The Self-Employment Investment Demonstration final evaluation
report: Part I--Participant Survey.
Abstract: This article was written in response to the preceding Bates paper; The
Financial Needs of Black-owned Businesses. Microenterprise development in the United
States is described. The results of the final evaluation of the Self-Employment Investment
Demonstration (SEID) are summarized. It is argued that Bates' conclusions on
microenterprise programs are incorrect because they based on the results of programs that
have been discontinued and that do not reflect the current microenterprise program models.
Successful microenterprise programs can include poor African Americans who do not have a
college education.
Key words: Microenterprise development, microenterprise loan programs, Self-Employment
Investment Demonstration (SEID).
Timothy Bates
Professor Raheim states in at least a dozen different variations the notion that
"Bates characterizes low-income African Americans . . . as having immutable human
capital defects." One problem with this is that I do not subscribe to the "Bates
view of low-income people as being deficient in human capital." Perhaps I should
thank Professor Raheim for permitting me to clarify any remote evidence of ambiguity on
this point that may appear in my article. Many low-income individuals are prime candidates
for successful pursuit of self-employment. "Low income" is not the trait to
focus upon, unless low income blocks access to financial capital. If low income impedes
efforts to finance one's business startup, then low income, by itself, can profoundly
undermine viability in many lines of small business. The proper focus is upon the
human-capital characteristics listed in the second sentence of my article, "the
founder's education, training, work experience and specific skills." One's income is
often correlated to such human-capital traits; in important cases of strong human capital
coexisting with low personal income, self-employment is a pragmatic option to consider if
adequate financing can be arranged. (Paragraph one from Bates' Reply.)
Lisa J. Servon
Author's note: Lisa J. Servon is Assistant Professor of Community and Regional Planning
at the School of Architecture at The University of Texas at Austin. The author would like
to thank the Aspen Institute Non-Profit Sector Research Fund, the U.S. Department of
Housing and Urban Development, and the Soroptimist International Founder Region Fellowship
for funding portions of this study. Thanks also to Timothy Bates, Manuel Castells, Troy
Duster, AnnaLee Saxenian, Michael Teitz, and the anonymous reviewers for thoughtful
comments and critical insights along the way; the usual caveat applies. Special gratitude
goes to the women at WISE„participants, staff, and board„for their time and
interest in my work.
Abstract: This paper presents case study research from Women's Initiative for Self
Employment (WISE) to argue that WISE, like many microenterprise programs, uses credit as a
springboard to achieve something that goes beyond simple access to business funding. As a
result of its mission to increase the economic options of women, WISE uses credit to
achieve individual empowerment. The majority of low income women are not equipped to start
businesses without first gaining access to other resources and skills. Programs like WISE
have therefore had to accommodate this recognition by shifting the focus of their missions
to include a broader range of acceptable outcomes. While these programs may not be meeting
traditional economic development goals such as creating many new businesses with multiple
employees, programs are performing important functions that are often more closely aligned
with the social welfare field. Specifically, these programs are functioning as social
training programs, empowering women to manage their lives within the constraints of the
new economy.
Key words: Microenterprise; economic development; poverty; gender.
Edward G. Rogoff and Myung-Soo Lee
Authors' note: Edward G. Rogoff is an Assistant Professor of Management at the School
of Business, Baruch College, City University of New York and he is a faculty coordinator
at the Baruch College Small Business Lab. Myung-Soo Lee is an Assistant Professor of
Marketing at the School of Business, Baruch College, City University of New York and a
former faculty coordinator at the Baruch College Small Business Lab.
Abstract: Government affects entrepreneurs and small business owners through regulation
and through programs and policies designed to foster business creation and growth. This
study reports on small business owners' and entrepreneurs' perception of the government's
impact. Both the positive and negative aspects of governmental impact were measured and
correlated with business size, business type, characteristics of the entrepreneur, and
goals and attitudes of the business owner. The authors propose a conceptual model that
develops three aspects of government impact on small business owners: as regulator, tax
collector, and helper. Empirical data from focus groups, open-ended questions and
closed-ended questions administered to a sample of 231 small business owners in midsize
cities in the eastern United States quantifies the perceived impact of these three
factors. The results showed that the role of government is generally perceived as negative
by small business owners and entrepreneurs, even if their businesses received help through
government programs. The impeding role of government was more evident among more
aggressive entrepreneurs and growth oriented businesses, clearly contrary to the true
intention of government programs. Policy implications and future research issues are also
discussed.
Key words: Entrepreneurship, small business, government regulation, government
programs.
Salome Raheim, Catherine Foster Alter, and Donald Yarbrough
Authors' note: Salome Raheim is an Assistant Professor and Donald Yarbrough is an
Associate Professor in the School of Social Work, University of Iowa, Iowa City, Iowa
52242-1223. Catherine Foster Alter is Dean of the School of Social Work at the University
of Denver. An earlier draft of this paper was presented at the International Evaluation
Conference, Evaluation for a New Century: A Global Perspective, Vancouver, Canada,
November 1-5, 1995.
Abstract: The use of microenterprise development as a strategy for creating economic
opportunity for the poor, the unemployed, and other economically disadvantaged groups is
increasing in the United States. Federal and state government agencies, as well as private
foundations, have funded microenterprise development demonstration projects to test the
efficacy of this strategy and identify effective program models. This paper provides a
brief historical survey of microenterprise programs supported by the U.S. government. It
describes problems the authors encountered while evaluating a multi-site national
demonstration program and several single-site state programs. Finally, the lessons learned
about conducting evaluations of microenterprise development programs are discussed.
Key words: Microloan program evaluation, microenterprise development, microloan
programs, self-employment.
Susan J. Fox-Wolfgramm
Author's note: Susan J. Fox-Wolfgramm is Assistant Professor of Management in the
College of Business Administration at San Francisco State University. Special thanks go to
Kimberly B. Boal, William B. Gartner, E. Frank Harrison, James G. Hunt and the anonymous
reviewers for their helpful comments regarding earlier drafts of this manuscript.
Abstract: The author studied two different banks' identification, interpretation, and
response to the Community Reinvestment Act (CRA) during a period when the regulation was
"uncharted territory" for the banking industry. The results of a
dynamic-comparative case study approach suggest that the banks handled CRA quite
differently, due to the interactions that existed among: (a) their relationships with
regulators, (b) unique strategic orientations, and (c) types of strategic issue processes.
The outcomes of this qualitative study are used to explore the circumstances that support
and hinder ethnic entrepreneurship. It is believed that these findings are important given
the interest in enhancing the effectiveness of developmental efforts in ethnic
entrepreneurship and mobilizing resources to offset business uncertainty.
Keywords: Community Reinvestment Act, bank regulation, minority business loans.
The Microcredit Summit
Note: The Microcredit Summit occurred in the beginning of February 1997 in Washington,
DC. This document was prepared by a working committee of the Microcredit Summit's
organizers and published by RESULTS International. The document was reprinted in the JDE.
Preamble: Our purpose as an assembly is to launch a global movement to reach 100
million of the world's poorest families, especially the women of those families, with
credit for self-employment and other financial and business services, by the year 2005.
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