New Business Owners See Racial Divide

That new store opening up down the street? According to a study by Dr. Philipp Koellinger of the German Institute for Economic Research and Maria Minniti, Babson College economics and entrepreneurship professor, the new business owner on your block is twice as likely to be a black American.

Koellinger and Minniti's full article to be published in the fall in the Small Business Economics Journal, "Not For Lack Of Trying: American Entrepreneurship in Black and White," also found that black Americans tend to be more optimistic about their business environment.



Black entrepreneurs, while growing in number and relatively happy initially, are more likely than their white entrepreneur counterparts to fail in the early stages of the business process, the study also determined.

According to 1993 Census figures, while about 11.6 percent of white workers were self-employed, only 3.8 percent of blacks were.

Minniti and Koellinger's article suggests the continuing divide is caused by barriers to the black entrepreneur. "We find that black Americans tend to exhibit more optimistic perceptions of their business environment than other racial groups," Minniti says. "Thus, our results suggest that the under-representation of black Americans among established entrepreneurs is not due to lack of trying but may instead be due to stronger barriers to entry and higher failure rates."

The findings are based on a U.S. sample from a 2002 Global Entrepreneurship Monitor (GEM) survey. GEM is led by Babson College and London Business School. —J.D.

Have an opinion you'd like to share with Training readers? E-mail your letter to edit@trainingmag.com and put "Letter to the Editor" in the subject line.