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Entrepreneur Factor Inputs and Small Business Longevity

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  • Timothy Bates

Abstract

This study analyzes nationwide samples of black and nonminority entrepreneurs who entered into small business ownership between 1976 and 1982. Econometric models are estimated that seek to differentiate traits of owners whose firms were still operating in late 1986 from those whose businesses had discontinued. Explanatory variables used to differentiate surviving firms from discontinuances include qualitative and quantitative measures of owner human capital, demographic traits, and owner financial capital inputs at the point of business startup. Certain characteristics typify the firms that are most likely to remain in business, irrespective of whether the owner is black or white: investment of substantial amounts of financial capital at the point of business startup; competing in the open marketplace, as opposed to catering to a minority clientele; high levels of owner educational attainment. The higher business discontinuance rates observed among blacks are rooted strongly in the lower financial capital inputs that typify the black firms at the point of startup.

Suggested Citation

  • Timothy Bates, 1989. "Entrepreneur Factor Inputs and Small Business Longevity," Working Papers 89-4, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:89-4
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    File URL: https://www2.census.gov/ces/wp/1989/CES-WP-89-04.pdf
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    References listed on IDEAS

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    1. Brennan, Michael J & Schwartz, Edwardo S, 1978. "Corporate Income Taxes, Valuation, and the Problem of Optimal Capital Structure," The Journal of Business, University of Chicago Press, vol. 51(1), pages 103-114, January.
    2. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    3. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
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    Cited by:

    1. Sarah Bridges & Louise Fox & Alessio Gaggero & Trudy Owens, "undated". "Labour Market Entry and Earnings: Evidence from Tanzanian Retrospective Data," Discussion Papers 13/05, University of Nottingham, CREDIT.
    2. Alfred R Nucci, 1992. "The Characteristics of Business Owners Database," Working Papers 92-7, Center for Economic Studies, U.S. Census Bureau.
    3. Adela Luque & Javier Miranda, 2000. "Technology Use and Worker Outcomes: Direct Evidence from Linked Employee-Employer Data," Working Papers 00-13, Center for Economic Studies, U.S. Census Bureau.
    4. Fairchild, Gregory B., 2008. "The influence of residential segregation and its correlates on ethnic enterprise in urban areas," Journal of Business Venturing, Elsevier, vol. 23(5), pages 513-527, September.
    5. Brian Headd, 1999. "The Characteristics of Business Owners Database, 1992," Working Papers 99-8, Center for Economic Studies, U.S. Census Bureau.
    6. Alfred R Nucci, 1989. "The Characteristics of Business Owners (CBO) Database," Working Papers 89-9, Center for Economic Studies, U.S. Census Bureau.

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    Keywords

    CES; economic; research; micro; data; microdata; chief; economist;

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