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Co-ethnic markets: Financial penalty or opportunity?

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  • Shinnar, Rachel S.
  • Aguilera, Michael B.
  • Lyons, Thomas S.

Abstract

This paper applies the view of resource based theory to minority entrepreneurship. It examines minority entrepreneurs’ reliance on co-ethnic markets in terms of the impact this has on the financial performance of their firms. This research focuses on three minority groups in particular: African Americans, Korean Americans and Mexican Americans. Findings indicate that owner's age and marital status, but not business age, shape the extent to which a business owner relies on co-ethnic clients. Furthermore, Korean American owned firms are less likely to have high proportions of co-ethnic clients compared to Mexican- and African American owned firms. Having a large co-ethnic clientele results in a financial penalty in terms of the revenue an owner draws from his or her business. This penalty occurs in businesses owned by all three groups of entrepreneurs. Findings lend support to the resource based theory view of the firm in terms of the need to dynamically apply resources in order to achieve a competitive advantage. Implications for theory and practice are discussed.

Suggested Citation

  • Shinnar, Rachel S. & Aguilera, Michael B. & Lyons, Thomas S., 2011. "Co-ethnic markets: Financial penalty or opportunity?," International Business Review, Elsevier, vol. 20(6), pages 646-658.
    • Handle: RePEc:eee:iburev:v:20:y:2011:i:6:p:646-658
    DOI: 10.1016/j.ibusrev.2011.02.014
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    2. Jiang, Guohua & Kotabe, Masaaki & Hamilton, Robert D. & Smith, Sheryl Winston, 2016. "Early internationalization and the role of immigration in new venture survival," International Business Review, Elsevier, vol. 25(6), pages 1285-1296.
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    7. Arrighetti, Alessandro & Canello, Jacopo, 2023. "Explaining the Multifaceted Patterns of Migrant Entrepreneurship in the Global Economy: A Resource-Based Approach," EconStor Preprints 273451, ZBW - Leibniz Information Centre for Economics.
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    9. Michael J. Pisani & Joseph M. Guzman & Chad Richardson & Carlos Sepulveda & Lyonel Laulié, 2017. "“Small business enterprises and Latino entrepreneurship: An enclave or mainstream activity in South Texas?”," Journal of International Entrepreneurship, Springer, vol. 15(3), pages 295-323, September.
    10. Pan, Mengyang & Hill, James & Blount, Ian & Rungtusanatham, Manus, 2022. "Relationship building and minority business growth: Does participating in activities sponsored by institutional intermediaries help?," Journal of Business Research, Elsevier, vol. 142(C), pages 830-843.
    11. Aissa Mosbah & Kalsom Binti Abd Wahab, 2018. "Factors Influencing Performance of Immigrant Service Firms," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(2), pages 1-11, February.
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