Abstract
We focus on the role of racial identity in the entrepreneurial journey, its antecedents and expected outcomes. Building on entrepreneurial identity and racial identity literatures, we analyze 21 reflective interviews featuring African American and Black entrepreneurs leading successful businesses to develop a racial identity approach to entrepreneurship. Findings uncover that the relevance of racial identity, often perceived as a liability before embarking on entrepreneurial endeavors, triggers entrepreneurial action to escape racial segregation and discrimination. Within the context of the venture, racial identity manifests in two distinct ways: (a) through a value proposition and target market defined by racial centrality and ideology, showing how racial identity may be an asset; and conversely, (b) through racial salience when accessing resources, reflecting racial identity as liability. Creating a venture with a strong racial identity is an essential aspect of its racialized meaningfulness. The entrepreneur aims to provide a racial role model from the African American community to empower future generations and reinforce the perception of racial identity as a valuable asset. Our study challenges the notion of race-neutral entrepreneurship and supports that entrepreneurship is an emancipation mechanism for racial minorities.
Plain English Summary
Racial identity plays a pivotal role in the entrepreneurial journey of African American and Black entrepreneurs in three important ways. First, one’s racial identity, once seen as a drawback, motivates these individuals to start businesses to escape racial bias. Second, racial identity in the venture is expressed in two main ways: entrepreneurs create products and services to racially similar customers, leveraging their identity as an asset; simultaneously, they face challenges in accessing financial resources due to their race, revealing it as a liability. Third, by building businesses that strongly reflect their racial identity, these entrepreneurs aim to inspire others from their community and change how society sees this identity. The principal implication of this study is that race significantly influences the entrepreneurial journey for individuals of racial minorities, affecting product development, target markets, resource access, and outcomes. It challenges the notion of race-neutral entrepreneurship, highlighting its potential to positively impact racial identity and communities.
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Data Availability
The data for this project is from public sources.
Notes
Examples: Federal tax breaks for minority-owned businesses (New-Markets Tax Credit), National Black Chamber of Commerce, The National Business League, U.S. Black Chambers, Inc., Walker’s Legacy, Minority Business Development Agency, Shop Black Business in major cities, celebration of Black Business Month, government and corporate procurement initiatives focused on Black-owned businesses, etc.
The contemporary concept of race first originated in the nineteenth century in the field of physical anthropology. It refers to common physical characteristics shared between people, whereas ethnicity derives from more ancient Latin and Greek origins and refers to common customs shared between people (Trimble, 2007). Both race and ethnicity are social constructions rather than biological definitions (Helms, 1990). Ethnic identity is defined as “a social identity based on the culture of one’s ancestors’ national or tribal group(s), as modified by the demands of the culture in which one’s group currently resides” (Helms, 1994, p. 293).
African American includes a cultural heritage and historical meaning attached to the identity of a group of people within the context of American society (Appiah, 1996; Ghee, 1990) and Black includes all those who identify as Black but may not necessarily be identified as African American. Thus, the term Black may or may not be inclusive of all persons of African descent, depending upon the individual’s viewpoint, as Black individuals in America may be several generations culturally removed from Africa (Gay, 1989). Some African Americans conceptualize the Black reference group as a group that is made up of African Americans only. Other African Americans may hold a more Pan-African view of the Black reference group, in which anyone of African descent is considered to be Black (Kuryla, 2023). Thus, in this study, we adopt the denomination of African American and Black to integrate the diverse perspectives and categorization expressed by the informants (c.f. Harper-Anderson, 2019; Prieto et al., 2021; Bogan & Darity Jr, 2008; Robb & Fairlie, 2007).
Average age of the interviewees: 35 years old; description of the businesses: I.1: VA disability compensation claims process; I.2: transportation company focused on the personalization; I.3: mindfulness awareness clothing line; I.4: cannabis dispensary specialized in retail; I.5: financial literacy and personal money management platform; I.6: Black-owned business products marketplace; I.7: luxury custom sleepwear.
More detailed information on the results of this additional data collection is available by request from the lead author.
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This work was partially supported by Fundação para a Ciência e a Tecnologia, grant UIDB/00315/2020 (https://doi.org/10.54499/UIDB/00315/2020).
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“I’ve met [Black] entrepreneurs who are saying: I chose this path because I no longer want to be in an environment where I feel it’s a racist environment. I feel unsafe because of my race. I can’t advance because of my race. And that was my story. I left an organization that was incredibly harmful to my well-being.” Y-Vonne Hutchinson (CEO and founder of ReadySet)
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Santos, S.C., Liguori, E.W., Morris, M.H. et al. A racial identity approach to entrepreneurship: the lived experiences of African American and Black entrepreneurs. Small Bus Econ (2024). https://doi.org/10.1007/s11187-024-00909-z
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DOI: https://doi.org/10.1007/s11187-024-00909-z