Skip to main content
SpringerLink
Log in

Not for Lack of Trying: American Entrepreneurship in Black and White

  • Published:
Small Business Economics Aims and scope Submit manuscript

Abstract

Using a sample obtained from a survey conducted in the United States during summer 2002, we study the variables related to observed differences in the rate of entrepreneurial involvement between black and white Americans. We find strong evidence that differences in subjective and often biased perceptions are highly associated with entrepreneurial propensity across these two racial groups. In addition, we find that black Americans tend to exhibit more optimistic perceptions of their business environment than other racial groups and are more likely than others to attempt starting a business. In fact, our results show that blacks are almost twice as likely as whites to try starting a business. 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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Acs Z. J., Carlsson B. and Karlsson C. (1999). The Linkages Among Entrepreneurship, SMEs and the Macroeconomy. In: Acs, Z. J., Carlsson, B., and Karlsson, C. (eds) Entrepreneurship, Small and Medium-Sized Enterprises and the Macroeconomy, pp. Cambridge University Press, Cambridge, UK

    Google Scholar 

  • Aldrich H. E. (1999). Organizations Evolving. Sage Publications, London

    Google Scholar 

  • Aldrich H. E. and Martinez M. A. (2001). Many are Called, but Few are Chosen: An Evolutionary Perspective for the Study of Entrepreneurship. Entrepreneurship Theory and Practice 25(4): 41–57

    Google Scholar 

  • Arenius, P. and M. Minniti, 2005, ‘Perceptual variables and nascent entrepreneurship’, Small Business Economics 24(3), 233–247

    Google Scholar 

  • Arrow K. J. (1998). What has Economics to Say About Racial Discrimination?. Journal of Economic Perspectives 12(2): 91–100

    Google Scholar 

  • Baldwin J. R. (1995). The Dynamics of Industrial Competition. Cambridge University Press, Cambridge

    Google Scholar 

  • Bates T. (1989). The Changing Nature of Minority Business: A Comparative Analysis of Asian, Nonminority and Black-Owned Businesses. Review of Black Political Economy 18: 25–42

    Article  Google Scholar 

  • Bates T. (2000). Financing the Development of Urban Minority Communities: Lessons of History. Economic Development Quarterly 14(3): 227–242

    Article  Google Scholar 

  • Bernardo A. E. and Welch I. (2001). On the Evolution of Overconfidence and Entrepreneurs. Journal of Economics and Management Strategy 10: 301–330

    Article  Google Scholar 

  • Blanchflower, D. G., 2004, ‘Self-employment: More may not be better’, NBER Working Paper No. 10286

  • Blanchflower D. G., Oswald A. and Stutzer A. (2001). Latent Entrepreneurship Across Nations. European Economic Review 45(4–6): 680–701

    Article  Google Scholar 

  • Blanchflower D. G. and Oswald A. J. (1998). What Makes an Entrepreneur?. Journal of Labor Economics 16(1): 26–60

    Article  Google Scholar 

  • Bogenhold D. and Staber U. (1993). Self-Employment: A Study of Seventeen OECD Countries. Industrial Relations Journal 24(2): 126–137

    Article  Google Scholar 

  • Borjas G. and Stephen B. (1989). Consumer Discrimination and Self-Employment. Journal of Political Economy 97(June): 581–605

    Article  Google Scholar 

  • Busenitz L. W. and Barney J. B. (1997). Differences Between Entrepreneurs and Managers in Large Organizations: Biases and Heuristics in Strategic Decision-Making. Journal of Business Venturing 12: 9–30

    Article  Google Scholar 

  • Cavalluzzo K. S., Cavalluzzo L. S. and Wolken J. D. (2002). Competition, Small Business Financing and Discrimination: Evidence from a New Survey. The Journal of Business 75(4): 641–679

    Article  Google Scholar 

  • Clark K. and Drinkwater S. (1998). Ethnicity and Self-Employment in Britain. Oxford Bulletin of Economics and Statistics 60(3): 383–407

    Article  Google Scholar 

  • Cooper A. C., Woo C. Y. and Dunkelberg W. C. (1988). Entrepreneurs’ Perceived Chances for Success. Journal of Business Venturing 3: 97–108

    Article  Google Scholar 

  • Davidsson P. and Honig B. (2003). The Role of Social and Human Capital Among Nascent Entrepreneurs. Journal of Business Venturing 18: 301–331

    Article  Google Scholar 

  • Dunne T., Roberts M. J. and Samuelson L. (1988). Patterns of Firm Entry and Exit in U.S. Manufacturing Industries. Rand Journal of Economics 19(4): 495–515

    Article  Google Scholar 

  • Dymski G. and Mohanty L. (1999). Financial Services in the Black Community – Credit and Banking Structure: Asian and African-American Experience in Los Angeles. American Economic Review 89(2): 362–366

    Article  Google Scholar 

  • Evans D. and Jovanovic B. (1989). An Estimated Model of Entrepreneurial Choice under Liquidity Constraints. Journal of Political Economy 97: 808–827

    Article  Google Scholar 

  • Evans D. and Leighton L. S. (1989). Some Empirical Aspects of Entrepreneurship. American Economic Review 79: 519–535

    Google Scholar 

  • Fairlie R. (1999). The Absence of the African-American Owned Business: An analysis of the Dynamics of Self-Employment. Journal of Labor Economics 17(1): 80–108

    Article  Google Scholar 

  • Fairlie R. (2004). Recent Trends in Ethnic and Racial Business Ownership. Small Business Economics 23(3): 203–218

    Article  Google Scholar 

  • Fairlie R. and Meyer B. (1996). Ethnic and Racial Self-Employment Differences and Possible Explanations. Journal of Human Resources 31(4): 757–793

    Article  Google Scholar 

  • Fairlie R. and Meyer B. (2000). Trends in Self-Employment among White and Black Men during the Twentieth Century. Journal of Human Resources 35(4): 643–669

    Article  Google Scholar 

  • Fairlie R. and Sundstrom W. (1997). The Racial Unemployment Gap in Long-Run Perspective. American Economic Review 87(2): 306–310

    Google Scholar 

  • Forbes, D., 2005, ‘Are Some Entrepreneurs More Overconfident than Others?’, Journal of Business Venturing 20(5), 623–640

    Google Scholar 

  • Horton H. (1991). Black Entrepreneurs: A Socio-demographic Analysis. Research in Race and Ethnic Relations 6: 105–120

    Google Scholar 

  • Hout M. and Rosen H. S. (2000). Self-Employment, Family Background and Race. Journal of Human Resources 35(4): 670–692

    Article  Google Scholar 

  • Kahneman D. and Lovallo D. (1993). Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking. Management Science 39: 17–31

    Article  Google Scholar 

  • Kauermann G. and Carroll R. J. (2001). The Sandwich Variance Estimator: Efficiency Properties and Coverage Probabilities of Confidence Intervals. Journal of the American Statistical Association 97: 482–493

    Google Scholar 

  • Kihlstrom R. E. and Laffont J. (1979). A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion. Journal of Political Economy 87: 719–748

    Article  Google Scholar 

  • Kirzner I. M. (1973). Competition and Entrepreneurship. University of Chicago Press, Chicago, IL

    Google Scholar 

  • Kirzner I. M. (1979). Perception, Opportunity and Profit. University of Chicago Press, Chicago, IL

    Google Scholar 

  • Koellinger, P., M. Minniti and C. Schade, 2005, ‘I think I Can, I think I Can: Overconfidence and Entrepreneurial Behaviour’, DIW Berlin, Discussion Paper 501

  • Liang K. Y., Zeger S. L. and Qaqish B. (1992). Multivariate Regression Analysis for Categorical Data. Journal of the Royal Statistical Society Series B 54: 3–40

    Google Scholar 

  • Light I. H. and Rosenstein C. (1995). Race, Ethnicity and Entrepreneurship in Urban America. Walter de Gruyter, New York, NY

    Google Scholar 

  • Meyer, B., 1990, Why Are There So Few Black Entrepreneurs?’, NBER Working Paper no. 3537

  • Minniti M. (2005). Entrepreneurship and Network Externalities. Journal of Economic Behavior and Organizations 57(1): 1–27

    Article  Google Scholar 

  • Parker S. C. and Robson M. T. (2004). Explaining International Variations in Self-Employment: Evidence from a Panel of OECD Countries. Southern Economic Journal 71(2): 287–312

    Article  Google Scholar 

  • Parker S. C. (2004). The Economics of Self-Employment and Entrepreneurship. Cambridge University Press, Cambridge

    Google Scholar 

  • Phelps E. S. (1972). The Statistical Theory of Racism and Sexism. American Economic Review 62(4): 659–661

    Google Scholar 

  • Phizacklea A. and Ram M. (1995). Ethnic Entrepreneurship in Comparative Perspective. International Journal of Entrepreneurial Behaviour and Research 1(1): 48–58

    Article  Google Scholar 

  • Reynolds P., Autio E. and Hay M. (2003). Global Entrepreneurship Monitor Report. E. M. Kauffmann Foundation, Kansas City, MO

    Google Scholar 

  • Reynolds, P., N. S. Bosma, and E. Autio, 2005, ‘Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003’, Small Business Economics 24(3), 205–231

  • Thaler R. H. (2000). From Homo Economicus to Homo Sapiens. Journal of Economic Perspectives 14: 133–141

    Article  Google Scholar 

  • Thurik R. A., Uhlaner L. M. and Wennekers S. (2002). Entrepreneurship and Its Conditions: a Macro Perspective. International Journal of Entrepreneurship Education 1(1): 25–64

    Google Scholar 

  • Wagner J. and Sternberg R. (2004). Start-up Activities, Individual Characteristics and the Regional Milieu: Lessons for Entrepreneurship Support Policies from German Micro Data. The Annals of Regional Science 38(2): 219–239

    Article  Google Scholar 

  • Walstad W. B. and Kourilsky M. L. (1998). Entrepreneurial Attitudes and Knowledge of Black Youth. Entrepreneurship Theory and Practice 23(2): 5–29

    Google Scholar 

  • White H. (1982). Maximum Likelihood Estimation of Misspecified Models. Econometrica 56: 997–1019

    Google Scholar 

  • Wooldridge J. (2002). Econometric Analysis of Cross Section and Panel Data. The MIT Press, Cambridge, MA and London

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. German Institute for Economic Research (DIW Berlin), Königin-Luise-str. 5, 14195, Berlin, Germany

    P. Köllinger

  2. Economics Division, Babson College, Luksic Hall 304, Babson Park, MA, 02457, USA

    M. Minniti

Authors
  1. P. Köllinger
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. M. Minniti
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to P. Köllinger.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Köllinger, P., Minniti, M. Not for Lack of Trying: American Entrepreneurship in Black and White. Small Bus Econ 27, 59–79 (2006). https://doi.org/10.1007/s11187-006-0019-6

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11187-006-0019-6

Key words

Jel Classifications

Search

Navigation