Academic journal article Journal of Small Business Management

Start-Up Motivations and Growth Intentions of Minority Nascent Entrepreneurs

Academic journal article Journal of Small Business Management

Start-Up Motivations and Growth Intentions of Minority Nascent Entrepreneurs

Article excerpt

Firm growth is widely considered to be a measure of success for entrepreneurial businesses. Data indicate that there are systematic differences between minority and nonminority-owned firms with respect to growth. Black entrepreneurs are 50 percent more likely to engage in start-up activities than white entrepreneurs, however, black-owned firms are smaller and less profitable than their white-owned counterparts. Following the effort-performance-outcome-logic of expectancy theory and using data from the Panel Study of Entrepreneurial Dynamics (PSED), our paper investigates the differences between black and white entrepreneurs' motivations to start and intentions to grow a new venture. Findings indicate that there are significant differences in motivations between black and white entrepreneurs both in starting and in their intentions to grow the new venture. Implications for future research are discussed.

Introduction

Growth is generally agreed as a good goal for most firms. It is widely celebrated in the media (e.g., Inc 100 fastest growing firms), and is considered a measure of entrepreneurial success (Davidsson 1991). However, not all small firms choose to grow (Wiklund, Davidsson and Delmar 2003; Rosa, Carter, and Hamilton 1996; Ginn and Sexton 1989). In fact, the majority of U.S. firms does not grow rapidly or become significantly large, and hence they comprise what is referred to as the economic core (SBA 2007; Kirchhoff 1994). However, it is generally agreed that some growth over time (i.e., growth in sales, employees, new products, or market share) is desirable for continued survival (Delmar, Davidsson, and Gartner 2003; Acs and Evans 1993).

To date, little research has examined the differences in entrepreneurial motivations to start and grow a new venture by race or ethnicity. If, as many suggest, entrepreneurship is truly the vehicle for social mobility and community development, then understanding more about why and how people of color become entrepreneurs and grow their businesses is very important. Recent data on black and white-owned firms from the Current Population Survey, the American Community Survey, the Economic Census, and the Survey of Business Owners indicate that there are systematic differences between white and black-owned entrepreneurial new ventures with respect to growth rate, profitability and number of employees (SBA 2007). For example, the number of black-owned start-ups increased by 45.4 percent (the highest percent increased compared to other ethnic groups) between 1997 and 2002 (SBA 2007). However, despite the impressive growth in the number of black-owned firms, they own only five percent of all U.S. firms with more than five employees (Fairlie and Robb 2008; Rogers et al. 2001). In addition, black-owned firms have the lowest four-year survival rate (35 percent) compared with a 48 percent average for all firms (Robb 2002).

Academic research on entrepreneurship and growth in African American firms has considered a wide variety of topics, including the role of public policy and government procurement in encouraging growth (Rasheed 2004; Bates 2003), access to financial capital (Fairlie and Robb 2008; Coleman 2005; Lash 2005), the role of community incubators in fostering entrepreneurship (Greene and Butler 2004), and the ways minority businesses position for growth by improving management, capital access and market expansion (Brush et al. 2007). Though these academic studies examine either the role that external environmental forces exert on minority new ventures, or the response of minority-owned firms to external environmental forces, none of them explore the role of entrepreneurial motivations to start and then grow a new venture. In our paper, we seek to address this gap by investigating the start-up motivations and growth intentions of minority entrepreneurs. Given that motivation is central to the entrepreneurial process (Baumol 1968), and that the entrepreneur must desire growth for it to take place (Ginn and Sexton 1989), the role of entrepreneurial motivations is increasingly important to our understanding of minority entrepreneurship (Bates 2003; Shane, Locke, and Collins 2003). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.