Abstract
The disadvantage theory of business enterprise predicts that blocked opportunity encourages self-employment among disadvantaged minorities. The present study argues that appropriate empirical tests of this prediction must carefully define key variables’ measurement and precisely specify the circumstances under which the theory is most applicable. The study analyses Census data from the Great Depression, comparing the regression estimates of different methodological approaches. The results identify the conditions under which, in accord with the theory’s prediction, a disadvantaged minority (blacks) is more likely than the majority group (whites) to be self-employed in response to limited labor force options. The findings reveal previous studies’ limitations and suggest new directions for survivalist entrepreneurship research.
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