Affirmative Action and Business

Black Women: Diversity and Inclusion Programs - Are they really assisting? In the last few decades, researchers, policymakers, economic development experts, and analysts of public policy are increasingly concentrating on the aspect of entrepreneurship in the African-American community, with respect to devising distinct strategies for facilitating economic success. Establishment of set-aside initiatives for minorities (or disadvantaged business initiatives) is one political strategy which serves as an instrument for enhancing small, poor businesses' chances of survival. Several of these businesses were African-American-owned and -run businesses (House-Soremekun, 2007; Chatterji, Chay & Fairlie, 2013).

This paper will look into the economics-politics interrelationship, by analyzing the aforementioned disadvantaged business initiatives' effect on African-American businesswomen's economic outcomes. Policy Background Set-aside initiatives for minorities first developed during the 1930s, with President Roosevelt's Great-Depression-era New Deal initiatives for addressing economic issues (House-Soremekun, 2007). The 1933 Unemployment Relief Act prohibited discrimination against people on the basis of color, creed or race. Requirements were stipulated, making it compulsory for companies that received federal governmental contracts in metropolises inhabited by a large share of Black people to employ a particular percentage of Blacks.

The primary focus of the SBA (Small Business Administration), instituted in 1953, was small-sized largely-White American businesses, rather than exclusively minority businesses. This body grew continually until, in the year 1958, it permanently became a federal agency (Chatterji et al., 2013). In this era, a key area of focus was: offering loans as economic aid to small enterprises, in addition to aiding them with federal contract receipt. President Nixon's Executive Order (EO 11458) of March 1969 offered the basis for establishing a national-level initiative to assist minority entrepreneurs (Chatterji et al., 2013). The U.S.

commerce secretary was assigned the responsibility of overseeing this program, for developing local-, state- and federal- level processes and facilitating long-term growth of minority companies. Therefore, innumerable federal department heads had to present reports detailing the strategy they will adopt for attaining positive outcomes, to the commerce secretary. The result was the Minority Business Enterprise Office's establishment. Set-aside initiatives are of two kinds. One entails allotment of a specific dollar value or share of total governmental contracts to minority contractors.

The other involves allotment of a specific share of governmental contracts to suppliers and subcontractors from minority communities, by prime contractors (Rice, 1991; Myers, 1997). Percentage goals are different for different schemes, and even occasionally within schemes in case of different purchases (e.g., construction contracts, professional services, and services and goods procurement). MBELDEF's (1988) information on local-level set-aside initiatives suggest that percentage goals vary from 1%-50%. The percentage goal of a majority of initiatives lies between 5 and 15%.

These initiatives are typically supplemented with procurement officers offering additional general support to minority business owners (Bates and Williams, 1993). Problem Statement Over time, minority businessmen have been granted several billion dollars' worth of contracts (Boston, 1999). With the enactment of the 1977 Public Works Employment Act and the 1978 Omnibus Small Business Act, practical goals pertaining to procuring contracts and dollars for minority companies could be established (House-Soremekun, 2007). But in spite of the big money involved, astonishingly little quantitative proof is seen with regard to their impacts, particularly on minority enterprises' formation.

This has resulted in a political and legal dispute in relation to these initiatives. Research Questions 1. Have businesspersons enrolled in, or profiting from, set-aside initiatives for minorities enjoyed more success compared to nonparticipating minority businesspersons? 1. Have businesspersons belonging to particular kinds of industry participated more in such initiatives? 1. Should better-educated businesspersons enroll more in such initiatives? 1.

Should well-established and older businesspersons enroll more in such initiatives? Research Significance This research is especially imperative, owing to recent challenges, on local as well as national levels, against policies for affirmative action, and set-aside initiatives for minorities (by extension). This research will offer a legal and historical perspective on the present debate pertaining to minority set-aside initiatives' survival. Additionally, it will explore their empirical effects on Black businesswomen and will contribute to existing literature on the subject, thereby contributing to decision-making in regard to the future of these programs.

Finally, this study forms a central aspect of my studies. I will be able to complete this course successfully through the successful completion of a number of academic activities and assessments, including this research work. Literature Review Chan and Myers (1996) explore construction contract and public procurement award to non-minority and minority businesspersons prior to, during, and following the execution of the set-aside initiative of New Jersey. The authors discovered that receipt of contracts by minority businesspersons and minority bidders, increased in number. A growth was also witnessed in contract volume.

Boston (1999) revealed that participation of minorities in Atlanta government contracts increased from 0.13% (1973) to more than 38% (1978), following set-asides' implementation in the year 1975. In the next decade, Atlanta's minority-owned companies received 191 million dollars or 15% of the overall value of total contracts awarded. Black business owners in Atlanta were also awarded 72 million dollars of the total 163 million dollars in subcontracts, from 1992 to 1995. Available literature offers scant evidence regarding the natural issue of whether or not set-aside initiatives affected the number of companies with owners hailing from minority backgrounds.

Boston (1998) utilizes information published from the SMOBE (Survey of Minority-Owned Business Enterprises) for contrasting growth rate of the number of firms owned by Blacks in cities which put affirmative action initiatives into operation during the 80s, compared to cities which didn't. He reported a 65% growth in Black-owned enterprises in the former cities and a 61% growth in the latter, between 1982 and 1992; the difference between the cities is statistically insignificant. MBELDEF (1988) offers information on cities and dates of program enactment.

SMOBE data does not, unfortunately, offer any information on White-owned companies' growth rates in either cluster of cities. Williams and Bates (1993) discovered that, from 1982 to 1987, Black companies grew in number and their overall sales increased more among cities that had Black mayors, as compared to cities that didn't. They assert that Black mayor influences are partially because of their promotion of set-aside initiatives for minorities.

Using the JCPES' (Joint Center for Political and Economic Studies) (1994) information regarding set-aside initiatives in twenty-eight cities, William and Bates (1995) looked into whether or not preferential procurement initiative characteristics impact minority-owned enterprises' survival. They conclude that survival rates are higher in case of minority companies for which 1-24% of sales are accounted for by local and state governmental organizations in cities having programs with particular characteristics in place. Mixed results are obtained for minority companies deriving no less than 25% of sales from local and state governments.

Inconclusive evidence exists, with regard to whether or not set-aside initiatives have brought about an increase in number of enterprises owned by minorities. Additionally, no research is found on these initiatives impacts on employment rates in the Black population. This paper attempts at examining the effects (or lack thereof), of the 80's set-aside initiatives implemented in cities, on business ownership in black females and rates of employment, thereby addressing such literature gaps. Methodology A case study approach has been chosen.

This study will analyze African-American businesswomen in Ohio's Cleveland city and eastern suburbs, between September and October 2016. The reason for choosing Cleveland as the study's setting is the large urban city's substantial population of African-Americans. This research will concentrate on small enterprises which aren't leading units in their industry (Bardic, 2011; Clemons and Mcbeth, 2009).

Criteria for labeling a business as 'small' include: relatively small initial owner investment; no more than 500 workers employed; usual annual profits amounting to below 100,000 dollars (however, there is a possibility of significant differences in the study sample with regard to the last criterion). Four key business types will be part of the study: construction, manufacturing, services, and trade or retail. Enterprises that didn't come under the above categories will be marked as "unclassified"; this includes marketing or promotion, distribution, finance, and real estate.

Data collection will chiefly concentrate on constructing a databank of businesspersons from the African-American community residing in Cleveland and eastern suburbs. The study's target sample is 10 businesses owned and run by African-American businesswomen. At present, no clear list exists covering names, contact numbers and address of northeast Ohio's African-American businesswomen. Multiple sample selection approaches will be employed, of which one will be composing a listing of Black-owned enterprises, included in Cleveland's Black Pages, situated in Cleveland and eastern suburbs (Clemons and Mcbeth, 2009).

But owing to voluntary participation in the publication, it may not.