Does the Digital Divide Extend to Minority- and Women- Owned Small Businesses?

Abstract

This chapter examines whether the digital divide in the United States extends to computer use in small businesses. The analysis is based on a 2003 telephone survey of 1,123 firms with fewer than 50 employees and at least one computer, and in-depth interviews with 45 business owners. The analysis provides no evidence of a business digital divide across racial, ethnic, and gender groups. In fact, firms owned by African-American males show more intensive computer use than white male-owned firms, even after controlling for firm and owner characteristics. We do, however, find links between the intensity of computer use and firm and owner characteristics, such as firm size, market reach, intensity of computer use in the relevant industry, and age of owner. Finally, the in-depth interviews suggest that businesses with effective computer use depend upon the technical expertise of the business owners or people in their social networks.