Analysis of Small-Business Viability in Urban Minority Communities

37 Pages Posted: 24 Jan 2012 Last revised: 4 Feb 2013

See all articles by Timothy Bates

Timothy Bates

Wayne State University - College of Urban, Labor, & Metropolitan Affairs; University of Vermont - College of Arts and Sciences

Alicia Robb

University of Colorado at Boulder; Next Wave Impact; Federal Reserve Banks - Federal Reserve Bank of Atlanta

Date Written: January 13, 2013

Abstract

Although minority and immigrant entrepreneurs in the U.S. have clearly chosen to concentrate in highly competitive low-profit retail and service lines of business clustered geographically in urban minority neighborhoods, their reasons for doing so are unclear. We investigate their motivations by analyzing viability among urban small businesses; specifically, we compare the longevity of firms targeting clients in minority neighborhoods to those serving clients in nonminority-white residential areas. Our broader concern is to understand why the entrepreneurial occupational choice has been embraced and, given this choice, why the inner-city minority-market has been targeted. While some claim this market offers attractive opportunities, others stress that the predominance of minority- and immigrant-owned firms in this sector reflects the fact that only the least desirable market niches are accessible to them. We find that serving local clienteles in minority neighborhoods is strongly related to firm closure and low profitability. Attractive business opportunities were not apparent.

Keywords: Minority entrepreneurship

JEL Classification: M12, J71

Suggested Citation

Bates, Timothy and Robb, Alicia, Analysis of Small-Business Viability in Urban Minority Communities (January 13, 2013). Available at SSRN: https://ssrn.com/abstract=1989448 or http://dx.doi.org/10.2139/ssrn.1989448

Timothy Bates (Contact Author)

Wayne State University - College of Urban, Labor, & Metropolitan Affairs ( email )

Detroit, MI 48202
United States

University of Vermont - College of Arts and Sciences ( email )

United States

Alicia Robb

University of Colorado at Boulder ( email )

Leeds Business School
Boulder, CO 80309
United States

Next Wave Impact ( email )

7455 Park Lane Road
Longmount, CO 80503
United States

Federal Reserve Banks - Federal Reserve Bank of Atlanta

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
625
Abstract Views
3,093
Rank
78,686
PlumX Metrics