I would like to thank professor John Butler forhis thoughtful and detailed comments on my book,

Race, Self-Employment, and Upward MobilityWhen I began to study the concept of social capitaland its role in promoting (inhibiting) smallbusiness formation and viability, I really didexpect to find at least some evidence that someforms of social capital were important businessaids. The broad concept is an appealing one. Itmakes sense that an immigrant entrepreneurembedded in a supportive co-ethnic networkthat generates loyal customers, employees, andfinancing should benefit from this situation. Smallfirms run by Vietnamese immigrants rely moreheavily upon serving minority clients, employingminorities, and raising capital by borrowing fromfriends and family than any other Asian immigrantsubgroup. Asian Indians represent the converse –borrowing most often from banks, relying mostoften upon whites as customers and employees.Relative to their Asian cohorts, the Vietnamese runthe smallest, least successful firms, while AsianIndians are much more successful in the smallbusiness realm than Asian immigrants generally.The bottom line is this: the social capital storiesspun by numerous sociologists studying immigrantsmall business viability do not hold up underscrutiny.

Every firm is embedded in a social contextand every small business is influenced by itsparticipation in networks. No one denies this.The important task is to identify specific formsof social capital that have important effects onsmall-business viability. Pioneers like Ivan Lighthave done this by claiming that rotating creditassociations benefit Asian-immigrant-ownedfirms. Evidence in this book uses self-responsesof many thousands of Asian immigrant businessowners – recorded on Census Bureau question-naires – to challenge Light’s position. This doesnot mean that future researchers will be unable tolink some sort of social capital positively to firmformation, growth, and survival. They probablywill. To date, however, positive evidence thatreliance on well-known forms of social capitalbenefits firm performance is fragmentary andqualitative. It is not convincing.

Professor Butler calls for a synthesis betweentraditional sociological analysis of self-employ-ment and “Bates strict analysis,” stressing humancapital, financial capital, and market accessdeterminants of small business viability. Thisis certainty a reasonable approach for futureresearchers to pursue. The issue at hand is notone of the superiority of one social science overanother. Small business researchers generallybenefit from reducing barriers between disciplines.When social scientists venture into other fieldsand start to interpret different bodies of literature,however, predictable problems arise. As aneconomist reading sociology studies through thelens of economics, my reading is fraught withskepticism, causing me to differ with the inter-pretation that a sociologist is apt to attach to the

Race, Self-Employment, andUpward Mobility: An IllusiveAmerican Dream; Response toJohn Sibley Butler’s Review Essay Timothy Bates

Small Business Economics

12: 189–190, 1999. 1999 Kluwer Academic Publishers. Printed in the Netherlands.

Final version accepted on June 4, 1998

Wayne State UniversityCollege of UrbanLabor and Metropolitan AffairsDetroitU.S.A.

same material. If I proceed, nonetheless, it is notbecause it is easy and it is not because I wish todismiss the contributions of sociology. Rather, itis because I want to shape the synthesis that isnow at an early emerging stage in the small

business, entrepreneurship field. Secondarily, Iwant to improve my understanding of how theworld works. The interdisciplinary synthesis thatProfessor Butler advocates may indeed be thewave of the future.

190 Timothy Bates