The Relationship Between Entrepreneurial Orientation and Firm Performance for Black Entrepreneurs

Abstract

This study evaluates the relationship between entrepreneurial orientation (EO) and firm performance for Black American entrepreneurs to propose a possible suggestion for the persistent performance gap between Black American entrepreneurs and others, particularly white entrepreneurs. The dominant explanations for this trend in the literature have tended to structural inequalities in access to funding and in wealth levels, resulting in an uneven playing field that places Black entrepreneurs at a considerable disadvantage. This review appears to offer a novel contribution in that EO is applied to test its connection to firm performance for Black entrepreneurs, and to evaluate how EO influences the development of social capital for Black entrepreneurs. Using a panel of self-reported business owners, we conduct a series of analyses including multivariate regression, hierarchical linear regression, and tests of mediation to discover that EO influences the development of social capital for the Black entrepreneur, and that the relationship between EO and firm performance is significant and positive for the Black entrepreneur but completely mediated by social capital, particularly that of external connections. The implication is that Black entrepreneurs need access to connections to fully realize the EO / firm performance relationship.