A Theory of Minority Entrepreneurship

Abstract

Since different racial and ethnic groups experience different entrepreneurial outcomes, we need to develop an explanation for these differences as a foundation for overcoming them. Early analyses of entrepreneurship by Cantillon, Turgot, Smith, Say are applied to problems of minority entrepreneurship. Menger, Schumpeter, and Kirzner provided the most modern and complete treatments, but entrepreneurship’s multifaceted nature makes it difficult to incorporate into formal models. Segmented markets and preferred habitat theories drawn from financial economics are applied to address special issues confronting minority entrepreneurs and suggest how they might inform public policy. Because policy implications are suggested, it is hoped that this paper may contribute to a constructive conversation on opportunities to encourage entrepreneurship and advance minority communities.