Maria Auxiliadora Briceño Barrios and Jose Daniel Anido R were visiting scholars at CUGS from July 2021 to January 2024. Both Dr. Briceño Barrios and Dr. Anido have a PhD in Economics with research experience studying small family owned businesses in their home city of Merida, Venezuela. During their time at CUGS, they worked on a study of Hispanic-owned family businesess in Hartford – an important sector in Hartford and especially in the neighborhoods directly around Trinity College. Here, they summarize their findings. A publication with the full results of the study is forthcoming.
Profile of Hispanic-Owned Family Businesses in Hartford (CT, U.S.) and their Contribution to the Community
by Maria Auxiliadora Briceño Barrios and Jose Daniel Anido R.
Introduction
In 2021, 99.9% of all U.S. firms (about 32.5 million) were small-sized, responsible for 46% of total employment[1]. Between 87% and 90% of businesses in North America (about 5.5 million) were family-owned (FB), employed 62% of the workforce, were responsible for the creation of 78% of all new jobs, and contributed 64% of total GDP[2]. Likewise, the number of Hispanics/Latinos in the U.S. is growing 6 times faster than non-Latinos[3], responsible for 20.9% of the real GDP growth of the country between 2011 and 2021[4]. Even though they are only 17% of the Connecticut state total population, Hispanics/Latinos make up 44% of the population of the city of Hartford[5], representing the largest race/ethnicity. In this scenario, a mixed, descriptive, and exploratory research was developed to understand and characterize Hispanic-owned small businesses (HB) located in Hartford, CT, particularly Family Businesses (FB). It also inquired about their contribution to the community and identified the main challenges and strategies they adopted to continue operating during the pre- and post- COVID-19 pandemic.
Methods
This mixed research considered two groups of study subjects: (i) owners and/or managers of small Hispanic businesses (n1, a simple random sample of 50 firms, with a maximum error of 0.077 and a confidence level of 95%); and ii) a non-probabilistic sample, n2, consisting of 12 key actors/informants belonging to community organizations related to HB. In (i) a semi-structured questionnaire, with 49 open and closed questions grouped according to the objectives was applied (after being approved by the Institutional Review Board of Trinity College, and a pilot test carried out for its validation); in (ii), an interview guide with 5 questions open-ended and semi-closed was used. Data was collected, processed, organized, and systematized by using MS-Excel® 2016 and SPSS® v. 27 software. Part of this data was triangulated with bibliographic and official of information, and results of the participant observation. To test associations between pairs of variables, some hypotheses were formulated and the chi-square and test of independence or Fisher’s exact test were performed, with a significance level α ≤ 0.05. In addition, a multiple correspondence analysis–MCA was performed to characterize the networking, embedding, and embeddedness of Hartford´s Hispanic small businesses.
Results
The main findings for Hispanic-owned small businesses can be summarized as follows: (i) According to the criteria established in official U.S. statistics, empirical evidence indicated that most of the Hispanic-owned businesses were located in the lower ranges in terms of number of employees and sales volume; (ii) there is a directly proportional relationship between the age of the business and educational level of its owners/managers (the older the business, the higher the educational level; p-value = 0.030); (iii) no evidence indicated that the older the business, the greater the territorial expansion (measured in the study by the existence of branches (1 out of 4 HB has unless one), origin of purchases, destination of sales, among other variables); (iv) in terms of cultural insertion, there was a tendency for Hispanic businesses to relate mostly with Hispanics when it came to employees and suppliers, while clients and/or customers were predominantly Hispanic and African-American. Considering this same variable, the self-perception of the HB owners/managers regarding English language proficiency was good. However, there was little concern/interest in improving this aspect of cultural insertion.
Concerning Hispanic-owned small Family Businesses of Hartford, the main findings emphasize that: (i) most of the consulted businesses were family-owned, according to the theoretical criteria that differentiate between FB and non-family, such as ownership, management, and continuity[6]; (ii) the study made it possible to contrast with the literature, the duration in years of one generation in charge of the family business (each 30 years); (iii) FB in Hartford are concentrated in a reduced number of economic activities (mainly in Accommodation and Food Services, and Retail Trade); (iv) in the city of Hartford, FB contribute more to employment than other types of businesses, due to the efforts and commitment they showed to their employees during the COVID-19 pandemic; (v) these types of businesses adopted more conservative/diversification strategies during the pandemic (e.g. adding products and/or services related or unrelated to existing ones), compared to the non-family businesses, which employed more aggressive/defensive strategies, such as strategic alliances, cost reduction, liquidation, and closure (p-value = 0.030); vi) during the pandemic, a significant part of the HB decided to address the crisis with external aid, by using funding from three financing sources: Paycheck Protection Program (PPP, used by 1 out of 3 FB), HEDCO Inc., and the Spanish American Merchants Association (SAMA), with no evidence of a relationship between the type of businesses and the financial support received to protect their employees (p-value = 0.050).
According to the MCA analysis, most of the businesses in the sample rely on purchases originating in the state of Connecticut, primarily the city of Hartford, as their main source of purchases, and they also sell their products in this region. These HB tend to be members of national, state, or local business associations. Their customers are from almost all the ethnic groups/races considered in the study, while they also have suppliers from ethnic groups/races other than Hispanic/Latino. They are also family businesses whose owners/managers tend to be between the ages of 51 and 75. Finally, by contrasting the perception of owners/managers of the Hispanic businesses with that of key stakeholders/informants regarding the resources available in Hartford, that facilitate or hinder the performance of small businesses, similarities and divergences were identified between both stakeholders. Physical Support (80% of the owners/managers) and Economic Promotion were the most valuated endowments/resources in Hartford, while Financing / Local Management (16%) and Financing and Taxation were the worst.
Conclusions and Recommendations
Overall, Hispanic-owned small businesses in Hartford, CT, were already facing a difficult situation before the COVID-19 pandemic. To keep functioning, their owners/managers resorted to external public and/or private sources of financing, the federal PPP being the most important of them. Among HB, the small family-owned businesses turned out to be more numerous and older businesses in Hartford, CT, so it is to be expected that a spirit of community engagement could be fostered. These types of businesses showed better performance in terms of second-generation educational attainment and adopted more conservative strategies during COVID-19, being more resilient and demonstrated a slight commitment to their employees than the NFB. However, like the HB as a whole, FB are a little bit distanced from their community space, limiting their action mainly to what is related to their economic activity. These businesses are missing out on opportunities provided by government, non-profit, and other local associations that could provide significant room for improvement in their businesses. However, when looking at their composition and characteristics, FB appear to have great potential to take advantage of them, and of the environment in which they operate.
The research also identified a sort of empty space or gap, from which some recommendations could be formulated. These include the need to foster closer ties between the studied businesses and other city stakeholders, particularly the local government for strengthening trust and relations between them (e.g., replicating and/or deepening programs such as the Revitalization of Facades; or developing others, such as Childcare Programs, to boost greater participation of Hispanic women in the local labor market; Municipal Management mechanisms, based on tax incentives and improvements in administrative procedures, etc.). As a result, a greater participation of “impartial” bridging organizations (e.g., universities, religious congregations, public centers, among others) is fundamental, as creators of meeting spaces and promoters of a greater participation and extension of the “intra-organizational” network of studied towards a more “inter-organizational” network, shared by all the actors involved. These agreements and common agendas could contribute to changing the perspective of how all actors perceive each other.
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