Suggest questions on race and entrepreneurship

Posted by: John Tozzi on September 4, 2008

Next week I’m scheduled to interview Robert Fairlie, a UC Santa Cruz economics professor and co-author with Alicia Robb of a new book called Race and Entrepreneurial Success. Fairlie’s book, based on extensive research and access to Census data that’s not available to the general public, has some jolting news:

  • Just 5.1 percent of black workers owned businesses in 2006, compared to 11.1 percent of white workers, 7.5 percent of Latino workers and 11.8 percent of Asian workers
  • The average sales of white-owned firms in 2002 was about $440,000, nearly six times the $74,000 average for black-owned firms
  • The median net-worth for black households is $6,166, compared to $67,000 for white households. The difference is important because startup capital is the biggest factor accounting for racial disparities in business success.
  • About 80 percent of Asian-owned businesses in the U.S. are owned by Asian immigrants. They have success rates similar to Asian business owners born in the U.S.

Fairlie and Robb focus on data, not policy prescriptions. But the implications of their data are important. For example:

…[A]n increase in both the number of minority-owned firms and the average number of employees per firm by only 10 percent could result in nearly 1 million new jobs for minorities. An increase of 1 million new jobs would be significant given there are roughly 3 million minorities currently unemployed in the United States.”

To address the racial disparities in entrepreneurship, we have to understand the reasons behind them. Fairlie’s one of the top experts in this field, and we’ll publish a Q&A with him after the interview. I have some questions in mind already. But what do you want to ask him?

Reader Comments

Joseph Kirby

September 5, 2008 6:34 PM

How does education factor into the above-listed statistics? Within each ethnic group, what percentage of business owners hold a college degree?

rohndawson

September 6, 2008 12:55 AM

In the technology sector, Vogt is well known industry luminary with two decades of executive tenure and an admirable track record He was instrumental in the operational and financial growth of five standard-setting start-ups that either became public companies or were acquired
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rohn

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Mydad

September 6, 2008 12:33 PM

What kinds of business generate higher revenues? Who are the main suppliers, partners, and customers? These questions can help reveal why the success of a small business is so race oriented.

Sharma

September 6, 2008 2:23 PM

What make Asian immigrant successful knowing that when they land in this country with bare basic money and then make it to the top?

Sheila Woodard

September 8, 2008 9:40 AM

How has the issues surrounding race in America affected race and entreprenureship? Can the statistics regarding Black Americans and entrenureship really be improved without the race in America issues being resolved first?

Pierre DeBois

September 8, 2008 12:07 PM

Is there any technological divide between minority and non-minority owned businesses that affect the reasons for the data disparity?

BusinessWeek reporter John Tozzi

September 8, 2008 5:58 PM

Thanks all, for submitting thoughtful questions. Some of these, particularly Pierre's question about the technology gap, hadn't been on my list. We'll publish excerpts from my conversation with Robert Fairlie later this week.

California Justise

September 8, 2008 9:52 PM

does anyone account for population ratio? IE African-American's account for 12% of the population, yet own 56% as many business. While Asians account for 16% own 103% as many as whites. So the question is NOT what is making blacks own less (yet by % of population more) but what are Asian-Americans doing that we should all look at and emulate? That's my opinion anyway.

Tessa Jackson

September 9, 2008 7:13 PM

Having worked with and coached black entrepreneurs for over a decade, and cofounded a nonprofit to help minority technology entrepreneurs, I have my own hypotheses regarding the following questions, but would like to know if the authors have any insights to share on them:

1) Why are minority owned businesses less likely to expand beyond "self-employment" and into becoming "employers"? Is it a lack of capital, a lack of ambition, or a direction function of these entrepreneurs' reasons for starting their business (e.g., not having to work for someone else)?

2) The founders and initial employees of many successful startups often have attended college or graduate school together (e.g., Hewlett-Packard, Google). That said, to what extent have alumni networks (or the lack of them) helped minority entrepreneurs grow and expand their companies, and how does it contrast with how non-minority entrepreneurs have used and benefited from their alumni connections?

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About

What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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