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

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  • Alicia Robb
  • Robert Fairlie

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 whiteowned 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.

Suggested Citation

  • Alicia Robb & Robert Fairlie, 2006. "Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States," Working Papers 06-32, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:06-32
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    File URL: https://www2.census.gov/ces/wp/2006/CES-WP-06-32.pdf
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    References listed on IDEAS

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    Cited by:

    1. Robert W. Fairlie & Julie Zissimopoulos & Harry Krashinsky, 2010. "The International Asian Business Success Story? A Comparison of Chinese, Indian and Other Asian Businesses in the United States, Canada and United Kingdom," NBER Chapters,in: International Differences in Entrepreneurship, pages 179-208 National Bureau of Economic Research, Inc.
    2. Widad Pitrus*, 2015. "Not all smooth sailing: Barriers to small business success for owner/managers from Middle Eastern communities in Melbourne," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(6), pages 293-304, Special I.

    More about this item

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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