Enhancing product market access: Minority entrepreneurship, status leveraging, and preferential procurement programs
Access to product markets is a key barrier faced by minority entrepreneurs. Preferential procurement programs, which include government set-asides and commercial supplier diversity initiatives, are intended to aid these entrepreneurs in overcoming this barrier. Although the first programs resulted in minimal improvements due to design flaws and poor oversight, some recent initiatives have been redesigned to address these inadequacies. Using a qualitative approach, we examine the impact of these programs on product market access and present a conceptual model of their effect on the opportunity identification, evaluation, and exploitation of Black and Hispanic entrepreneurs. Our analysis suggests that preferential procurement programs may expand product market access by improving the information available to entrepreneurs and by altering the incentives of key resource providers. As a result, these programs may actually enable some minority entrepreneurs to achieve rapid expansion (high-growth entrepreneurs) and others to overcome personal limitations and establish viable enterprises (lower growth entrepreneurs) by leveraging their minority status.
KeywordsMinorities Black entrepreneurs Hispanic entrepreneurs New ventures Entrepreneurship Small business programs
JEL ClassificationsL26 M13
We are indebted to Timothy Bates and William Bradford for providing insightful feedback and suggestions. We are also grateful to the participants in the Kauffman Foundation Conference for New Insights and Potential Sources of New Entrepreneurial Growth: Minority Entrepreneurship, January 5–6, 2016, for helpful comments. Finally, Maria Lugo and Roger Koppl provided invaluable assistance and advice.
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