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http://ssrn.com/abstract=960016
 
 

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Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States


Alicia Robb


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

Robert W. Fairlie


University of California, Santa Cruz - Department of Economics

January 2007

IZA Discussion Paper No. 2566

Abstract:     
Using confidential and restricted-access microdata from the U.S. Census Bureau, we find that Asian-owned businesses are 16.9 percent less likely to close, 20.6 percent more likely to have profits of at least $10,000, and 27.2 percent more likely to hire employees than white-owned businesses in the United States. Asian firms also have mean annual sales that are roughly 60 percent higher than the mean sales of white firms. Using regression estimates and a special non-linear decomposition technique, we explore the role that class resources, such as financial capital and human capital, play in contributing to the relative success of Asian businesses. We find that Asian-owned businesses are more successful than white-owned businesses for two main reasons - Asian owners have high levels of human capital and their businesses have substantial startup capital. Startup capital and education alone explain from 65 percent to the entire gap in business outcomes between Asians and whites. Using the detailed information on both the owner and the firm available in the CBO, we estimate the explanatory power of several additional factors.

Number of Pages in PDF File: 59

Keywords: Asians, entrepreneurship, startup capital, self-employment

JEL Classification: J15, L26

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Date posted: January 29, 2007  

Suggested Citation

Robb, Alicia and Fairlie, Robert W., Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States (January 2007). IZA Discussion Paper No. 2566. Available at SSRN: http://ssrn.com/abstract=960016

Contact Information

Alicia Robb
University of California, Berkeley - Coleman Fung Institute for Engineering Leadership ( email )
130 Blum Hall #5580
Berkeley, CA 94720-5580
United States
Kauffman Foundation ( email )
4801 Rockhill Road
Kansas City, MO 64110-2046
United States
HOME PAGE: http://www.kauffman.org/kfs
University of Colorado at Boulder ( email )
1070 Edinboro Drive
Boulder, CO 80309
United States
Federal Reserve Banks - Federal Reserve Bank of Atlanta
1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
University of Deusto - Basque Institute of Competitiveness
Mundaiz 50
San Sebastián, 20012
Spain
Marin Economic Consulting ( email )
United States
HOME PAGE: http://marin-economic-consulting.com/
Robert W. Fairlie (Contact Author)
University of California, Santa Cruz - Department of Economics ( email )
Department of Economics
Engineering 2 Bldg.
Santa Cruz, CA 95064
United States
831-459-3332 (Phone)
HOME PAGE: http://econ.ucsc.edu/~fairlie/
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