Analysis of Small-Business Viability in Urban Minority Communities

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

Timothy Bates

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

Alicia Robb

University of California, Berkeley - Coleman Fung Institute for Engineering Leadership; Kauffman Foundation; University of Colorado at Boulder

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 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

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