Capital Constraints and Industry Mix Implications for African-American Business Success

Abstract

Although not universally appreciated, African-Americans have a long history of entrepreneurial achievements against the odds. African-Americans are more likely to start a business, yet, are less likely to succeed. Well-documented discriminatory practices by industry sectors exclude minorities from lucrative business opportunities. This paper examines participation of African-American owned businesses in key industries to assess implications for revenue generation and hiring potential. While the numbers of African-American owned businesses are increasing; and these firms are providing greater contributions to the socio-economic progress of African Americans and potentially other disadvantaged groups, evidence that African-American owned businesses suffer adversely from unequal access to capital markets and institutional barriers is prevalent. A wealth gap between African-American owned business and non-minority business owners exists and for some industries has widened, as survival of African-American owned business is threaten.