Thirteen million people in the United States--roughly one in ten workers--own a business. And yet rates of business ownership among African Americans are much lower and have been so throughout
the twentieth century. In addition, and perhaps more importantly, businesses owned by African Americans tend to have lower sales, fewer employees and smaller payrolls, lower profits, and higher
closure rates. In contrast, Asian American-owned businesses tend to be more successful. In Race and Entrepreneurial Success, minority entrepreneurship authorities Robert Fairlie and
Alicia Robb examine racial disparities in business performance. Drawing on the rarely used, restricted-access Characteristics of Business Owners (CBO) dataset compiled by the U.S. Census
Bureau, Fairlie and Robb examine in particular why Asian-owned firms perform well in comparison to white-owned businesses and black-owned firms typically do not. They also explore the broader
question of why some entrepreneurs are successful and others are not.
After providing new comprehensive estimates of recent trends in minority business ownership and performance, the authors examine the importance of human capital, financial capital, and family
business background in successful business ownership. They find that a high level of startup capital is the most important factor contributing to the success of Asian-owned businesses, and that
the lack of startup money for black businesses (attributable to the fact that nearly half of all black families have less than ＄6,000 in total wealth) contributes to their relative lack of
success. In addition, higher education levels among Asian business owners explain much of their success relative to both white- and African American-owned businesses. Finally, Fairlie and Robb
find that black entrepreneurs have fewer opportunities than white entrepreneurs to acquire valuable pre-business work experience through working in family businesses.
