Minority Entrepreneurship and Alternative Opportunities Inside Established Organizations

• In Event: 3253 - Gender, Race, and Organizational Careers

Abstract

Whereas prior research has documented persistent inequality in entrepreneurial performance between African American and White entrepreneurs, less attention has been devoted to investigating whether and how racial minorities cope with such obstacles. In this study, we propose and empirically document one such adaptation strategy: the pursuit of a new venture through intrapreneurship –or within employer organizations. Analyzing a representative sample of entrepreneurs in the United States from the Panel Study of Entrepreneurial Dynamics II, we found that, relative to Whites, African Americans are more likely to found new businesses through intrapreneurship than through entrepreneurship. We further show that, individuals from disadvantaged groups are more likely to seek funding to start a new business from employers than marketplace investors. Consistent with the notion that employer firms provide more support to minorities than do investors in the market, we find lesser disparities across minorities and non-minorities in accumulation of entrepreneurial resources internally. Our findings also suggest that minorities are more motivated to grow new ventures, when exploiting these new businesses within an employer organization than through an independent startup. Finally, our results lend support to the notion that intrapreneurship offers a substitute for entrepreneurship: we find that the tendency to pursue internal ventures is amplified when opportunities for startups are scarce, and when minorities perceive other venues of advancement as inferior to intrapreneurship. More generally, the study illuminates a novel adaptation strategy to address barriers that minorities face within an entrepreneurial setting.

Authors

• Tiantian Yang, Duke University

• Aleksandra Joanna Kacperczyk, Massachusetts Institute of Technology