| A significant population of African American entrepreneurs (AAEs) operates in the untaxed and unregulated economy, also known as the informal or underground economy, which deprives them of economic and financial assistance, prevents society from receiving tax support, and exposes society to unsafe products and services (Young, 2002; Jones & Tullous, 2002). This research study postulated that differences exist in the levels of social capital between AAEs operating in the informal economy and AAEs operating in the formal economy. Social capital refers to the ability to leverage social and business networks for personal gain (De Carolis & Saparito, 2006; Liao & Welsch, 2005; Putnam, 2000). A quantitative study that utilized a 21-question survey instrument to assess social capital was undertaken in the greater metropolitan area of Dayton, Ohio. One hundred sixteen AAEs responded to the survey, which relied upon a referral sampling methodology developed for studying hidden populations. The data were analyzed using the t test for independent samples and the Mann-Whitney U test. Both tests failed to reject the null hypothesis that no difference exists between the social capital indices of AAEs who operate in the formal economy and the social capital indices of AAEs who operate in the informal economy. Findings also revealed (a) age, income, marital status, and education of both groups of AAEs are similar and (b) an interaffiliation exists between both groups of entrepreneurs. The study's outcome has the potential to affect business assistance program models, such that the models focus on leveraging existing relationships between informal and formal business as a means to attract AAEs operating in the informal economy to the mainstream. |
