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

59 Pages Posted: 29 Jan 2007  

Alicia Robb

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

Robert W. Fairlie

University of California, Santa Cruz - Department of Economics

Date Written: January 2007

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.

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

JEL Classification: J15, L26

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: https://ssrn.com/abstract=960016

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

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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