‘Why Even Bother Trying?’ Examining Discouragement among Racial‐Minority Entrepreneurs

Abstract

We extend organizational research on racial-minority social and economic inequality by developing a mixed embeddedness perspective to investigate whether and why certain racial-minority entrepreneurs become discouraged with important entrepreneurial tasks -namely, seeking capital from financial institutions. Concretely, we examine borrowing discouragement among three predominant racial-minority entrepreneur groups in the United States -African Americans, Hispanic Americans, and Asian Americans -using two independent samples from the US Federal Reserve Board. Our findings indicate that African Americans and Hispanic Americans are more likely to be discouraged than White Americans, while Asian Americans are less likely to be discouraged than African Americans. Our theory and findings suggest that for certain racial minorities, socio-historical experiences and shared knowledge of inequalities may influence individual behaviour through increasing discouragement toward important opportunities and entrepreneurial tasks.

What We Talk About When We Talk About Inequality: An Introduction to the Journal of Management Studies Special Issue

“…Perhaps the most shocking element of Neville et al's () study is the observation that different degrees of internalized discouragement can be observed across different types of minority groups. African Americans demonstrate the highest levels of discouraging self‐talk, followed closely by Hispanics.…”

“…Neville et al () extend this argument by showing how, once established, inequality is maintained by a different form of talk – the self‐talk of discouragement. Based on an analysis of US data derived from the US Federal Reserve Board's Survey of Small Business Finances , these researchers show that minority entrepreneurs consistently choose not to pursue available sources of financing because they thought their application would be turned down.…”

“…The self‐conversation of discouragement amongst African Americans has become so deeply internalized that it appears to be part of the collective memory of an entire mnemonic community (Zerubavel, ). A clear conclusion from Neville et al's () research is that, like any institution, inequality has an established status order. Apparently, even inequality is distributed unequally.…”

“…Asian American entrepreneurs, by contrast, are relatively indistinguishable from Hispanics in terms of their levels of discouragement. In explaining this difference, Neville et al () hypothesize that the unique history of African Americans may explain the observed fact that they exhibit three or four times the level of discouragement to pursue financial opportunities than their Hispanic or Asian counterparts. The self‐conversation of discouragement amongst African Americans has become so deeply internalized that it appears to be part of the collective memory of an entire mnemonic community (Zerubavel, ).…”

“…The illusion of choice that employers offer workers when labour is abundant is clearly a process of rhetorical persuasion. Based on the Neville et al () study of a systemic history of internalized discouragement, we can also see how a form of internal talk is a prerequisite for workers in times of surplus labour to adopt practices of self‐exploitation.…”