Analysis of Small-Business Viability in Urban Minority Communities
Wayne State University; Wayne State University - College of Urban, Labor, & Metropolitan Affairs
University of California, Berkeley - Coleman Fung Institute for Engineering Leadership; Kauffman Foundation; University of Colorado at Boulder; Federal Reserve Banks - Federal Reserve Bank of Atlanta; University of Deusto - Basque Institute of Competitiveness; Marin Economic Consulting
January 13, 2013
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.
Number of Pages in PDF File: 37
Keywords: Minority entrepreneurship
JEL Classification: M12, J71working papers series
Date posted: January 24, 2012 ; Last revised: February 4, 2013
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