Reconceptualizing the Enclave: Measuring Success Among Latino‐Owned Businesses

Abstract

ObjectiveThis study considers whether ethnic economy characteristics, such as serving a primarily co‐ethnic customer base or having a business located among co‐ethnics (i.e., enclaves), promote greater success for Latino‐owned businesses. Previous studies offer unclear accounts of how the enclave is measured and have suffered from issues of selection bias. I validate spatial measures with additional measures related to ethnic economies.MethodsRather than starting with a predetermined geographic location, I leverage a national business sample, the 2018 Survey of U.S. Latino Business Owners (N = 4,024), to estimate an ordered logistic regression that predicts the successful characteristics of the economic niche under which Latino‐owned businesses operate.ResultsI find Latino‐owned businesses have the greatest profitability selling Latino products but see the greatest revenue returns serving mostly non‐Latino customers. I uncover the largest effect sizes among Latino‐owned businesses that mainly employ co‐ethnics rather than among businesses located within a defined geography.ConclusionThese findings suggest ethnic economies are not geographically bounded, as previously theorized, but rather culturally based.