An analysis of the formation and failure rates of minority-owned firms
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This article primarily investigates the applicability of principles of industrial organization to an understanding of the formation and failure process of minority-owned firms. Among these principles are that formation will be high (and failure low) when a firm is located in a high growth industry, a high growth geographic locale, and an industry with low capital intensity and low concentration. The article also evaluates whether some of the hypotheses from the minority literature, such as the impact of SBA loans to minorities, also contribute to an explanation of the formation and failure process.
KeywordsPercent Level Capital Intensity Small Business Administration Potential Entrepreneur Firm Average Size
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- 1.Gavin Chen, et al., “Minority Business Enterprise Today: Problems and Causes,” MBDA (January 1982).Google Scholar
- 3.Population is not only a supply-side variable but also a demand-side variable insofar as the population in a region affects the demand for a firm’s goods and services.Google Scholar
- 4.Faith H. Ando,An Analysis of the Growth and Failures Rates of Minority-Owned Businesses, a report submitted to MBDA (September 1983).Google Scholar
- 5.Faith H. Ando,Capital Issues and the Minority-Owned Business, a report for MBDA (December 1986), forthcoming.Google Scholar
- 6.This data was originally collected for the study by David H. Swinton and John Handy,The Determinants of the Growth of Black-Owned Businesses: A Preliminary Analysis, a report submitted to MBDA (September 1983).Google Scholar