Addressing the Racial Wealth Gap and Structural Racism Through Increased Black Entrepreneurship: An Entrepreneurial Ecosystem Perspective

Abstract

Black households trail other racial groups when it comes to economic factors such as employment, income, and wealth. As discussed in this paper, a significant issue that contributes to these disparities is lower rates of new venture creation and successful business ownership within Black communities. While research has sought to explain this underperformance, no consensus has been reached. Moreover, the role of systemic racism has been underexplored. Improving Black entrepreneurship could help reduce the racial economic gaps and understanding the reasons for diminished Black new venture creation is vital for the development of effective public policy solutions. Utilizing an entrepreneurial ecosystem framework, and a systemic racism theory lens, we discuss challenges faced by Black entrepreneurs and present a model illustrating the issues. It is argued that racism has resulted in lower access to inter-connected resources within Black entrepreneurial ecosystems which has hindered new venture creation and productive entrepreneurship. We provide broad public policy recommendations for improving Black entrepreneurial ecosystems, including greater access to financial capital, mentoring, and entrepreneurship education through Historically Black Colleges and Universities. Practical and theoretical implications are discussed and future research directions are offered.