Stigma in Business: Attributes and Ties that (Do Not) Work
35 Pages Posted: 29 May 2019 Last revised: 17 Jul 2019
Date Written: July 15, 2019
Opportunities for socialization are critical for success in business. However, such opportunities are not equally available to all business owners. Discrimination in such opportunities can be a major source of disadvantage for business owners from historically marginalized communities, that face stigma. In this paper, we argue that challenges faced by these groups are distinct from those of other underrepresented and socioeconomically disadvantaged groups. We document that business owners from historically marginalized communities, specifically Dalits in India, face a large income gap even if they have a similar socioeconomic background to other business owners. Such a business income gap gets erased for other underrepresented and socially disadvantaged communities who do not face historical stigma. We find that the greater the stigma associated with a particular community, the greater their business income gap. We document that historically marginalized groups are more disadvantaged in industries that are more embedded, and that within-community social capital with higher-status acquaintances is highly resourceful for business owners from non-marginalized communities, but not for those from marginalized communities. Beyond-community social capital becomes critical for the success of business owners from marginalized communities, although they are able to tap them as much as other groups.
Keywords: discrimination, entrepreneurship, inequality, intergroup relations, social networks
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