The study of wealth creation and economic prosperity and its related formulas that predict success, stands at the center of scholarship that is concerned with how countries, regions and cities prosper. When Adam Smith penned The Wealth of Nations in 1776, he posited the nation state as the unit of analysis for an understanding of prosperity. Jan Jacobs, in Cities and the Wealth of Nations, posits the city as the major contributor to wealth creation within nation states. In a real sense, these works are indicative of theoretical debates that have been discussed within the academy for years.
The purpose of this chapter is to understand, within the context of nation states, cities and regions, the contribution of women and minority-owned enterprises in America.
The theoretical tradition for the study of women and ‘minority’ enter- prises lay in the early scholarship of George Simmel, whose work brings together the importance of the city and the development of entrepreneur- ship. Writing in the late 1800s, he tried to account for the structures that produced people who were more likely to start enterprises as societies were moving from hunting and gathering to market economies. Using Europe as a laboratory, he noted that people who brought market economies to early hunting and gathering societies were distinct ethnic groups who were never from the existing economic structure of the established society, but were merchants from city life. To the established society, these merchants represented cosmopolitan life and were viewed as alien, as was the art of trading. Thus Simmel’s famous statement, the stranger as trader and the trader as stranger, was born. To Simmel, entrepreneurs were ‘strangers’
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who for different reasons had been denied opportunities in established societies, and became catalysts for entrepreneurial development in the western world.
Max Weber, a German scholar writing at the turn of the last century, also had an intense interest in understanding the development of entrepreneur- ship, or the fundamental basis of the work ethic. His ideas appear in The Protestant Ethic and the Spirit of Capitalism, and can be seen as a natural extension of Simmel’s work. His theoretical legacy is the idea that religious or ethnic minorities who have little opportunity to serve the state are driven into economic activity with peculiar force. He noted that this had been true of the Huguenots of France, the Poles under Lewis XIV, and the Jews for hundreds of years. In a real sense, the groups that appear in Weber’s work can be seen as representing Simmel’s strangers.
Simmel’s strangers and Weber’s excluded groups are what we now called immigrant, minority and women entrepreneurs. The theoretical word that binds these groups is ‘strangers’. It is certainly true that each immigrant group has its own unique history, a history that could differ greatly from other groups. For example, immigrant Russians and Chinese have different experiences of market economies and of course different historical experi- ences. White females, in the aggregate, certainly have different experiences than have female immigrants or other females who are non-white. Black Americans, who are not immigrants, share a unique experience within America. Although there is certain overlap among these groups, they share the reality of having differential opportunities in the history of America.
Or, as Simmel would say, established societies create ‘strangers’ out of them because of their historical exclusion from the opportunity structure. In the case of some modern strangers, this might be due to racial differences, the mastery of the host language, or the reality of gender exclusion within the established society.
Also related to our discussion is the emphasis on regions, or how certain regions tend to outperform other regions. In an interesting kind of way, scholarship that examines the importance of regions has connected Simmel’s strangers with economic prosperity throughout history. When we pay attention to business history, this relationship can almost be seen as a scientifi c pattern, a pattern that can be seen in the ancient world. In a major research effort, Karl Moore and David Lewis (1999) tie together the historical importance of regions, strangers in foreign lands and economic development:
Long before their armies marched up and down the Tigris and Euphrates to terrorize the ancient world, groups of talented Assyrian traders [peacefully] took up residence in foreign countries hundreds of kilometers away from home, being
welcomed by the princes of Babylon, Aram and even distance Anatolia as a blessing and not a scourge. As they formed their numerous commercial colonies in foreign lands, these Old Assyrian merchants of the second millennium BC
perfected a thousand-year-old system of private enterprise inherited from Sumner and Babylon. Living and trading near the dawn of civilization, these corporate traders, moreover, were innovative to a startling degree, for the commercial structures they created may rightly be described as one of the fi rst attempts at the ‘entrepreneurial government’ being celebrated in the 1990s.
Systematic, strong and predictive observations were made by scholars such as Simmel, who observed ‘strangers’ immigrating to foreign lands and engaging in enterprise. These basic ideas allow us to understand how regions prosper as newcomers settle in certain regions. More importantly they show us how present-day groups of women and ‘minorities’, who are not immigrants, but ‘strangers’, can enhance communities through entrepreneurial behavior.
Studies of regions that prosper, thanks to the presence of ‘strangers’, have a strong tradition that is being revitalized in the context of American schol- arship. As noted by Butler and Kozmetsky (2004) in Immigrant and Minority Entrepreneurship: The Continuous Rebirth of American Communities, under- standing regional prosperity also means understanding the contributions of newcomers and ‘strangers’. As early as 1953, a Presidential Commission on Immigration and Naturalizations noted, ‘The richest regions are those with the highest proportion of immigrants’. Their industry, their skills and their enterprises were major factors in the economic development that made these regions prosperous. Also, in Immigrants and the American City, Thomas Muller (1993) examines how immigrants create entrepreneurial activities for wealth creation in gateway cities such as Miami, Florida, New York City and San Francisco. These cities owe their population growth, especially since the1970s, exclusively to immigration. For generations, however, immigrants have fl ocked to these cities, revitalizing them and contributing to their continued economic stability.
As noted earlier, the study of women and minority groups can also be seen in the tradition of ‘strangers’. But, in order to do this one has to treat the development of entrepreneurial activities as a lag effect within an equation, and return to the days when the ‘stranger’ effect was the strongest. For example, Black Americans who will never assimilate have a strong tradition of new venture development as they have moved, as Abram Harris (1936) notes in The Negro as Capitalist, from slavery to business enterprise. One also has to control for time periods (for example, free Blacks in the north and south before the Civil War and entrepreneurial efforts after the Civil War in the south). More importantly, white females and Black Americans, groups that have been discriminated against in certain ways, can be seen
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as ‘strangers’ in the tradition of Simmel. In this chapter the theoretical tradition of the stranger is applied to recent immigrant groups within prosperous regions, Black Americans within regions with a tradition of economic security, and women entrepreneurs.