Relationship building and minority business growth: Does participating in activities sponsored by institutional intermediaries help?

Abstract

Historically, minority businesses have faced barriers to growth in mainstream U. S. markets. Institutional intermediaries have emerged as a low-cost solution. They help minority businesses access large, established corporate members. They provide training designed to improve long-term viability by enhancing internal management skills and processes within minority businesses. Drawing on social capital theory and using an online survey, we examine 113 minority businesses affiliated with a regional council of the National Minority Supplier Development Council (NMSDC). We find that their selective participation in different types of intermediary-sponsored activities influences their relationships with corporate and other minority members, although to different degrees. Moreover, we find that government contracting experience strengthens how relationship building with corporate members affects their growth. Compared to Hispanic and Asian minority businesses, African American minority businesses experience higher growth from relationship building with other minority members.