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Small-business viability in America’s urban minority communities

Author

Listed:
  • Timothy Bates

    (Wayne State University, USA)

  • Alicia Robb

    (Ewing Marion Kauffman Foundation, USA)

Abstract

Although minority and immigrant entrepreneurs in the US have chosen to concentrate in low-profit retail and service lines of business clustered geographically in urban minority neighbourhoods, their reasons for doing so are unclear. We investigate their motivations by analysing viability among urban small businesses; specifically, we compare the longevity of firms targeting clients in minority neighbourhoods to those serving clients in nonminority-white residential areas. Our broader concerns are to understand why the entrepreneurial occupational choice has been embraced. A key objective is to identify specific barriers that may retard small-firm creation and development in minority-neighbourhood environs. While some claim this market offers attractive opportunities, others stress that predominance of minority- and immigrant-owned firms in this sector reflects the fact that only the least desirable market niches are accessible to them. We find that serving local clienteles in minority neighbourhoods is strongly related to firm closure and low profitability.

Suggested Citation

  • Timothy Bates & Alicia Robb, 2014. "Small-business viability in America’s urban minority communities," Urban Studies, Urban Studies Journal Limited, vol. 51(13), pages 2844-2862, October.
    • Handle: RePEc:sae:urbstu:v:51:y:2014:i:13:p:2844-2862
    DOI: 10.1177/0042098013514462
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    References listed on IDEAS

    as
    1. Bates, Timothy & Robb, Alicia, 2008. "Analysis of young neighborhood firms serving urban minority clients," Journal of Economics and Business, Elsevier, vol. 60(1-2), pages 139-148.
    2. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, March.
    3. Timothy Bates, 2010. "Alleviating the Financial Capital Barriers Impeding Business Development in Inner Cities," Journal of the American Planning Association, Taylor & Francis Journals, vol. 76(3), pages 349-362.
    4. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    5. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, March.
    6. Alejandro Portes, 2010. "Economic Sociology: A Systematic Inquiry," Economics Books, Princeton University Press, edition 1, number 9211.
    7. Timothy Bates & Alicia Robb, 2013. "Greater Access to Capital Is Needed to Unleash the Local Economic Development Potential of Minority-Owned Businesses," Economic Development Quarterly, , vol. 27(3), pages 250-259, August.
    8. Michael Aguilera, 2009. "Ethnic enclaves and the earnings of self-employed Latinos," Small Business Economics, Springer, vol. 33(4), pages 413-425, December.
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    Citations

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    Cited by:

    1. Timothy Bates & William D. Bradford & Robert Seamans, 2018. "Minority entrepreneurship in twenty-first century America," Small Business Economics, Springer, vol. 50(3), pages 415-427, March.
    2. Ratan J. S. Dheer, 2018. "Entrepreneurship by immigrants: a review of existing literature and directions for future research," International Entrepreneurship and Management Journal, Springer, vol. 14(3), pages 555-614, September.
    3. Joseph Farhat & Sharon Matusik & Alicia Robb & David T. Robinson, 2018. "New directions in entrepreneurship research with the Kauffman Firm Survey," Small Business Economics, Springer, vol. 50(3), pages 521-532, March.
    4. Rachel Meltzer & Sean Capperis, 2017. "Neighbourhood differences in retail turnover: Evidence from New York City," Urban Studies, Urban Studies Journal Limited, vol. 54(13), pages 3022-3057, October.
    5. Bethany Smith & Charles M. Tolbert, 2018. "Financial Motivations And Small Business Longevity: The Effects Of Gender And Race," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(04), pages 1-20, December.
    6. Alesia Montgomery, 2016. "Reappearance of the Public: Placemaking, Minoritization and Resistance in Detroit," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 40(4), pages 776-799, July.
    7. Christopher J. Boudreaux, 2021. "Employee compensation and new venture performance: does benefit type matter?," Small Business Economics, Springer, vol. 57(3), pages 1453-1477, October.
    8. Paige Clayton, 2024. "Different outcomes for different founders? Local organizational sponsorship and entrepreneurial finance," Small Business Economics, Springer, vol. 62(1), pages 23-62, January.
    9. Timothy Bates & Joseph Farhat & Colleen Casey, 2022. "The Economic Development Potential of Minority-Owned Businesses," Economic Development Quarterly, , vol. 36(1), pages 43-56, February.
    10. Prieger, James, 2023. "Local banking markets and barriers to entrepreneurship in minority and other areas: Does broadband availability help?," MPRA Paper 118102, University Library of Munich, Germany.
    11. Timothy Bates & Alicia Robb, 2016. "Impacts of Owner Race and Geographic Context on Access to Small-Business Financing," Economic Development Quarterly, , vol. 30(2), pages 159-170, May.
    12. Prieger, James E., 2023. "Local banking markets and barriers to entrepreneurship in minority and other areas," Journal of Economics and Business, Elsevier, vol. 124(C).

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