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Race and Entrepreneurial Success : Black-, Asian-, and White-Owned Businesses in the United States - Robert W. Fairlie

Race and Entrepreneurial Success

Black-, Asian-, and White-Owned Businesses in the United States

Paperback

Published: 13th August 2010
For Ages: 18+ years old
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Choice Outstanding Academic Title, 2009. Thirteen million people in the United States--roughly one in ten workers--own a business. And yet rates of business ownership among African Americans are much lower and have been so during the last 100 years. In addition, and perhaps more importantly, businesses owned by African Americans tend to have lower sales, fewer employees and smaller payrolls, lower profits, and higher closure rates. In contrast, Asian American-owned businesses tend to be more successful. In "Race and Entrepreneurial Success, " minority entrepreneurship authorities Robert Fairlie and Alicia Robb examine racial disparities in business performance. Drawing on the rarely used, restricted-access Characteristics of Business Owners (CBO) data set compiled by the U.S. Census Bureau, Fairlie and Robb examine in particular why Asian-owned firms perform well in comparison to white-owned businesses and black-owned firms typically do not. They also explore the broader question of why some entrepreneurs are successful and others are not. After providing new comprehensive estimates of recent trends in minority business ownership and performance, the authors examine the importance of human capital, financial capital, and family business background in successful business ownership. They find that a high level of startup capital is the most important factor contributing to the success of Asian-owned businesses, and that the lack of startup money for black businesses (attributable to the fact that nearly half of all black families have less than $6,000 in total wealth) contributes to their relative lack of success. In addition, higher education levels among Asian business owners explain much of their success relative to both white- and black-owned businesses. Finally, Fairlie and Robb find that black entrepreneurs have fewer opportunities than white entrepreneurs to acquire valuable prebusiness work experience through working in family businesses.

"The relationship between race and entrepreneurial success is a critical social issue. Fairlie and Robb provide a comprehensive discussion of the existing empirical literature in addition to presenting important new results. This volume is required reading for anyone who wants to understand racial differences in the propensity to start and grow new businesses."--Harvey Rosen, Department of Economics, Princeton University -- Harvey Rosen "The relationship between race and entrepreneurial success is a critical social issue. Fairlie and Robb provide a comprehensive discussion of the existing empirical literature in addition to presenting important new results. This volume is required reading for anyone who wants to understand racial differences in the propensity to start and grow new businesses." Harvey Rosen , Department of Economics, Princeton University

Prefacep. ix
Introductionp. 1
Racial Patterns in Business Outcomesp. 1
Outline of This Bookp. 7
Main Findings of the Researchp. 9
Racial Disparities in Business Ownership and Outcomesp. 13
Racial Differences in Business Ownershipp. 14
Recent Trends in Business Ownershipp. 15
Racial Trends over the Twentieth Centuryp. 20
Explanations for Racial Differences in Business Ownershipp. 21
Trends in the Number of Minority-Owned Businessesp. 27
Comparison of SBO/SMOBE and CPS Estimatesp. 29
Racial Patterns and Trends in Business Outcomesp. 33
Racial Differences in Business Outcomes: Evidence from the CBOp. 41
Estimates from Other Business-Level Data Sourcesp. 45
Differences across Asian and Latino Groupsp. 45
Conclusionsp. 47
The Determinants of Small Business Successp. 49
Educationp. 51
Family-Business Backgroundp. 53
Evidence from the CBO on Intergenerational Links in Business Ownershipp. 54
Work Experience in Family Businessesp. 56
Business Inheritancesp. 56
Intergenerational Links, Family-Business Backgrounds, and Business Successp. 58
Other Forms of Business Human Capitalp. 59
Identifying the Determinants of Business Outcomesp. 61
Regression Results
Educational Effectsp. 66
The Effects of Family-Business Background on Outcomesp. 67
Other Forms of Business Human Capitalp. 69
Profitsp. 70
Gender Issuesp. 71
Examining the Sensitivity of Results to Alternative Sample Definitionsp. 77
Correcting for Missing Datap. 80
Multiple Imputation
Startup Capitalp. 81
Industryp. 84
Startup Capital and Industry Estimatesp. 87
Age of the Businessp. 90
Conclusionsp. 91
Appendixesp. 93
Estimating the Intergenerational Transmission in Business Ownership
Why Are African American-Owned Businesses Less Successful?p. 97
Racial Differences in Educationp. 99
Family-Business Backgroundp. 101
Racial Differences in Family-Business Experiencep. 103
Racial Differences in Business Human Capitalp. 106
Financial Capitalp. 107
Black/White Differences in Wealthp. 108
Family Wealthp. 112
Lending Discriminationp. 113
Differential Types of Financingp. 114
Racial Differences in Startup Capitalp. 117
Industry Differencesp. 119
Identifying the Causes of Black/White Differences in Business Outcomesp. 121
Differences between Male and Female Business Ownersp. 125
Contributions from Startup Capital and Industry Differencesp. 130
Other Potential Explanations: Consumer Discriminationp. 132
Networksp. 133
Conclusionsp. 136
Appendixesp. 138
Nonlinear Decomposition Method
Why Are Asian-Owned Businesses More Successful?p. 145
Social Capital and Ethnic Resourcesp. 147
Human, Financial, and Other Types of Capitalp. 149
Educational Differencesp. 149
Family-Business Experiencep. 151
Differences in Business Human Capitalp. 153
Wealth Differencesp. 155
Types of Financingp. 155
Startup Capitalp. 158
Industry Differencesp. 159
Hours Workedp. 161
Asian Subgroupsp. 163
Identifying the Causes of Asian/White Differences in Business Outcomesp. 167
Conclusionsp. 172
Appendixp. 173
Conclusions and Implicationsp. 175
Financial Capitalp. 177
Family-Business Experiencep. 179
Human Capitalp. 181
Policy Implicationsp. 182
New Policy Ideasp. 185
Data Appendixp. 189
The Survey of Business Owners (SBO) and the Survey of Minority-Owned Business Enterprises (SMOBE)p. 190
The Characteristics of Business Owners (CBO)p. 197
The Current Population Survey (CPS)p. 199
Individual- versus Business-Level Datap. 201
Additional Data Sources for Studying Minority-Owned Businessesp. 203
Summaryp. 204
Notesp. 207
Referencesp. 215
Indexp. 231
Table of Contents provided by Publisher. All Rights Reserved.

ISBN: 9780262514941
ISBN-10: 026251494X
Series: The MIT Press
Audience: Professional
For Ages: 18+ years old
Format: Paperback
Language: English
Number Of Pages: 256
Published: 13th August 2010
Publisher: MIT Press Ltd
Country of Publication: US
Dimensions (cm): 22.9 x 15.2  x 1.3
Weight (kg): 0.36