Black Americans more likely to start a business

Jun 06 2006 by Brian Amble Print This Article

Black Americans are twice as likely as white Americans to try to start a business, according to a study by Dr. Philipp Koellinger of the German Institute for Economic Research and Babson College and Economics and Entrepreneurship Professor Maria Minniti.

The full article, "Not For Lack Of Trying: American Entrepreneurship In Black And White," also found that black Americans tend to exhibit more optimistic perceptions of their business environment than other racial groups. However, black entrepreneurs are more likely than white entrepreneurs to fail in the early stages of the entrepreneurial process.

The findings are based on a sample obtained from the Global Entrepreneurship Monitor survey conducted in the United States during the summer of 2002. GEM is led by Babson College and London Business School.

According to U.S. Bureau of the Census 1993 figures, approximately 11.6 per cent of white workers are self-employed but only 3.8 per cent of black workers are self-employed.

The research suggests that such a lack of participation in business ownership among blacks is not due to a lack of entrepreneurial propensity.

"Just the opposite," said Prof. Minniti. "We find that black Americans tend to exhibit more optimistic perceptions of their business environment than other racial groups.

"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."


Older Comments

I've posted before; I work for Winning Workplaces, a nonprofit that helps small and midsized businesses create better work environments. It's interesting you bring up this latest research that suggests that black Americans are more likely to start a business, as we came across recent research by the U.S. Census Bureau that found that this group are also becoming entrepreneurs at a rapidly increasing rate. Although it came out in April 2006, the Bureau's report looked at the years 1997 to 2002. It found that the number of black-owned businesses in the United States rose 45 percent to 1.2 million, while the combined revenue increased 25 percent to $88.8 billion. This would seem to support the research you mentioned from the German Institute for Economic Research and Babson College.

Mark Harbeke

The main reason black businesses fail is because they don't like to advertise their product or service. For years black business owners have been to cheap to spend any money on advertising or promotion so they will always fail. The flip side of the issue is a lot of newspapers or magazines that are well known do not want to deal with small amounts of advertising dollars because they do not get big commision checks. But black owned businesses can still advertise in local magazines and local newspapers and get some exposure without breaking the bank. Whenever a black business owner says to you they only advertise by word of mouth, what they are really saying to is they are to cheap to really advertise