| Using the 1997 National Family Finn Business data set, Tobit analysis was conducted to determine the predictors of household business income over the poverty threshold, for families that have started a business. On average, these firms do transfer {dollar}18,000 over the poverty threshold to their households. However, 39%, or 2,894,980 households, do not transfer sufficient business income to their households to keep the family out of poverty. The significant characteristics that were positively associated with household business income above poverty were education, health, business manager's weekly work hours, separate managers for home and business, business age, net business income as percent of gross, amount of weekly work hours the spouse works in the business, total number of employees, negotiating style of family functioning, and financial business management practices. The significant characteristics that were negatively associated with household business income above poverty were: the business manager having other work, the amount of other income (besides family firm income), sole proprietorship, number of unpaid relatives, spouse working in the business, living in a rural location, being home-based, and the amount of task adjusting management conducted by the household. Based on the McDonald and Moffitt decomposition the threshold effect was larger, meaning that a unit change in a variable had a greater effect on getting a household out of poverty than on changing household business income for those households who already have business income greater than the poverty threshold. These results lead to a new appreciation of the “family” component of family business, acknowledging family resource management as an important contribution to both household and business achievements. For example, nationally, increasing household business income {dollar}1,000 would move 81,609 households from below the poverty threshold to above the poverty threshold. Small changes in the both negotiating (potential impact of {dollar}1,128) and financial management scales (potential impact of {dollar}1,415) could bring about the {dollar}1,000 increase needed to bring these households above the poverty threshold. Improving family functioning and management can have effects on household economic status comparable to improving business management. These topics should be included in business enterprise curricula. |
