Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States

Alicia Robb () and Robert Fairlie
Additional contact information
Alicia Robb: Kauffman Foundation

No 2566, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using confidential and restricted-access microdata from the U.S. Census Bureau, we find that Asian-owned businesses are 16.9 percent less likely to close, 20.6 percent more likely to have profits of at least $10,000, and 27.2 percent more likely to hire employees than white-owned businesses in the United States. Asian firms also have mean annual sales that are roughly 60 percent higher than the mean sales of white firms. Using regression estimates and a special non-linear decomposition technique, we explore the role that class resources, such as financial capital and human capital, play in contributing to the relative success of Asian businesses. We find that Asian-owned businesses are more successful than white-owned businesses for two main reasons – Asian owners have high levels of human capital and their businesses have substantial startup capital. Startup capital and education alone explain from 65 percent to the entire gap in business outcomes between Asians and whites. Using the detailed information on both the owner and the firm available in the CBO, we estimate the explanatory power of several additional factors.

Keywords: self-employment; startup capital; entrepreneurship; Asians (search for similar items in EconPapers)
JEL-codes: J15 L26 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2007-01
New Economics Papers: this item is included in nep-bec, nep-ent and nep-sea
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Citations: View citations in EconPapers (3)

Published - published in: Journal of Population Economics, 2009, 22 (4), 827-858

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https://docs.iza.org/dp2566.pdf (application/pdf)

Related works:
Working Paper: Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States (2008)
Working Paper: Determinants of Business Success: An Examination of Asian-Owned Businesses in the United States (2006)
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