Do black-owned businesses employ minority workers? new evidence

Most of the workers employed by black-owned businesses are minorities. This pattern typifies small firms as well as large firms, firms in blue collar industries such as construction as well as in white collar industries such as finance. The hypothesis that reliance upon minority workers may restrict the viability of black firms is tested and rejected; there appears to be no relationship between firm viability and labor force racial composition.     

Rural minority business development

This study is a first attempt to undertake formal research and policy analysis of a heretofore neglected topic, rural minority business development. Data show that only about one-sixth of all minority-owned firms are located in rural (nonmetro) areas with some groups recording even lower percentages. For example, only 11 percent of Hispanic firms were found in rural areas in 1987. However, proportions of nonmetro Hispanic firms reach 20 to 50 percent in some southwestern states and proportions of nonmetro black enterprises reach 30 to 70 percent in some southeastern states. Review of the research literature discloses that rural minority businesses experience critical problems associated with four kinds of capital needed to support any successful enterprise: physical, financial, social and human. Examples are given of programs devoted to rural enterprise development which address problems related to the four forms of capital. Insights gleaned from the examples and additional observations by policy analysts are used to suggest policy directions for expanding rural minority business.     

The changing nature of minority business: A comparative analysis of asian,nonminority, and black-owned businesses

This study compares the performance of small businesses formed between 1976 and 1982 by three groups: 1) Asian males, 2) black males, and 3) nonminority males. Self-employed Asians are outperforming nonminorities and blacks. A subset of black-owned firms—small scale ghetto-oriented operations—is shown to be laggard. Weak internal markets, commercial bank redlining, and loss of entrepreneurial talent are factors in undermining the inner city black business community. Successful black-owned firms are increasingly removed from the ghetto and from serving a minority clientele.     

Inequality in metropolitan industrial revenue bond programs

Industrial revenue bonds (IRBs) have become an increasingly popular, though expensive and controversial, tool of economic development at the state and local levels. That controversy has focused on the economic impact of IRBs: Whether or not they meet the intended goals of creating jobs and stabilizing the tax base of local communities, and whether the benefits are worth the costs. Though IRBs are often justified, at least in part, as a particularly useful program for older, urban, minority communities, little research has been done on the participation of racial minorities and women in IRB programs. This article examines Chicago’s IRB program and finds that minorities have not participated equitably. Racial minorities and women are underutilized in many firms receiving this form of publicly subsidized financial assistance, and minority-owned businesses receive a disproportionately small share of the loans. Policy recommendations are offered to assure equitable participation of racial minorities and women in IRB programs.     

The myths,facts, and theories of ethnic,small-scale enterprise financing

This article combines the results of three financial studies that examine capital issues affecting minority business development. The results are presented so as to explain or refute conventional wisdom regarding capital availability, cost of capital, credit market discrimination, sources of capital and differences in firm capital composition. Generally, Asian and Hispanic businesses more approximate nonminority businesses in the sources of capital, the cost of capital, total capital investment, and access to capital. Black firms, on the other hand, face credit discrimination from all sources of capital, which limits their access to capital, increases its cost, and affects firm profitability. Consequently, black firms have a smaller capital composition at startup and during operations. The only deviation from this pattern occurs where minority and nonminority financial institutions vie for black business patronage by reducing the cost of borrowing and increasing the availability of funds.     

Is small beautiful? Understanding the contribution of small businesses in township tourism to economic development

The increased importance attached by policy-makers to the anticipated developmental effects of tourism in developing countries has been insufficiently examined by academic researchers, particularly in the context of the contribution of small firms in urban areas. This deficiency is addressed by providing a review of existing research followed by an analysis of interviews with 90 tourism business located within and outside the townships of Langa and Imizamo Yethu, Cape Town, South Africa. The findings reveal tensions between the different actors involved in township tourism. While the involvement of small, locally owned, businesses is beneficial, it is limited by conflicts of interest, lack of trust, limited social networks and little attachment to the township locality. The discussion highlights the complexity of tourism's role in economic development, which has significant implications for local policy-makers.     

Migrants and urban wage: Evidence from China's internal migration

Using China's 2005 1% population survey, this paper examines the wage impact on urban workers of rural to urban migration. We find that, on average, migrants increase the wages of urban workers, with the effect being magnified for more skilled urban workers. This suggests that migrants with skills similar to those of urban workers may complement them. We explore the possible channels of these effects. From the supply perspective, we find that migration inflows accelerate the occupational upgrading of urban workers, especially for low- and medium-skilled workers. From a demand perspective, as the share of migrants in the urban labor force increases, the number and output of industrial firms also increase, and firms become more reliant on low-skilled workers. The more migrants in a city, the greater the available employees for industrial firms, particularly for low-skilled employees. However, the effects on high-skilled firms are much smaller or insignificant. In addition, we find that migrants have little impact on firms' capital-labor and capital-output ratios. This suggests that firms can expand through capital adjustments to absorb inexpensive migrants, which alleviates the possible negative impact of migrants on the urban labor market.     

How does economic integration influence employment and wages in border regions? The case of the EU enlargement 2004 and Germany’s eastern border

This paper considers the (short-run) employment and wage effects of the 2004 EU enlargement on firms located close to Germany’s eastern border. We use a 50% sample of Germans plants and apply difference-in-differences estimators combined with a matching approach. We evaluate changes in total employment, the employment shares of low-skilled and East European workers and the wages for low-skilled, skilled and high-skilled workers in various sectors. Our results suggest basically no short-run employment effects of the EU enlargement except for firms active in wholesale and retail trade, hotels and restaurants. We also find some evidence for a stronger employment of East European workers in almost all border firms, although the effects are quantitatively small. Negative wage effects are only found for skilled workers in consulting, research and related activities.     

Urban economic transformation and minority business opportunities

Conclusion In summary, this study hypothesized and found evidence of black business growth opportunities in business services, amenities, finance, and real estate. Decline of small-scale black retailing was hypothesized, but this decline was found to be much more apparent in snowbelt as opposed to sunbelt urban areas. Manufacturing was found to be surprisingly durable in the snowbelt and extraordinarily weak in the sunbelt, which is quite inconsistent with basic economic transformation trends operating in both regions. Weak performance in black-owned sunbelt manufacturing paralleled similar performance in sunbelt black-owned wholesaling. Sunbelt weaknesses in these two major industry groupings require explanation and would be appropriate topics for future research. Older central cities that once served as centers for industrial production are rapidly being transformed into cities where administrative and service functions are the dominant economic activities. Smaller, service-oriented firms are thriving in these cities, and minority-owned businesses appear to be major beneficiaries of this important urban trend. Finally, minority business development policies are most likely to be successful if they are complimentary to the basic long-term trends that are transforming urban America.     

How does the development of digital finance affect small business tax compliance? Empirical evidence from China

How will the development of digital finance affect corporate tax compliance? In the digital economic age, this is a crucial issue. Using the 2011–2015 national tax survey database (NTSD) and the Peking University digital finance index, this paper examines the causal relationship between digital finance and small business tax compliance. Our baseline results show that each standard deviation increase in the digital finance index reduces the level of tax noncompliance by 7.5% for small businesses. We exclude the interference of contemporaneous policies, utilize a specification design based on neighboring cities across provincial borders, and employ instrumental variable estimation methods to jointly alleviate concerns about endogeneity. Furthermore, mechanism analysis shows that digital finance impacts small business tax noncompliance by easing corporate financing constraints and capturing tax-related “digital information”. Finally, we analyze the heterogeneous effects of digital finance development. The effects on tax noncompliance are weaker for large firms (placebo group), small businesses supported by the government's industrial policy, and small businesses located in poor credit environment areas.     

Linkages between minority business characteristics and minority banks’ locations

This study presents evidence regarding differences in the financial characteristics of minority business enterprises (MBEs), contingent upon whether or not they are currently located in markets which contain minority banks. We employed Dun and Bradstreet financial data for the period 1975–83. We concluded that, on average, MBES not located in markets with minority banks were larger than the bank-related MBES, laid greater emphasis on fixed assets, and financed their businesses with more equity. The bank-related MBES apparently had greater access to debt financing and operated with greater liquidity.     

Public capital and small firm performance

Previous research on the role of public capital (infrastructure) in private production has emphasized potential complementarities between public and private capital at an aggregate level. Presumably such effects, if they exist, arise from benefits enjoyed by individual units of production. Because of the potential for them to be location-specific or capital constrained, it is conceivable that small businesses may benefit disproportionately from public capital. Tests using financial data for 871 small firms from 1992–96 indicate a positive and statistically significant elasticity between private labor productivity and the level of public capital in the area where the firms are located. Such a positive elasticity provides further evidence that public and private capital are complementary inputs into production and has important policy implications.This research has been supported through a grant from the Kauffman Center for Entrepreneurial Leadership, the support for which the authors gratefully acknowledge.     

Is Bigger Still Better? The Decline of the Wage Premium at Large Firms

This study shows that the wage premium paid by large firms fell over the past 20 years and that this decline in the size premium is most pronounced among the least educated workers. Empirical evidence supports several explanations for the shrinking size premium. First, there has been a convergence in the returns to worker characteristics at large and small firms over time. Second, small and large firms are hiring more workers with similar characteristics. Particularly important are the declining share of workers at large manufacturing firms and the rising share of workers at large retail firms. Also, the greater decline of unionism at large firms has contributed significantly to the decline in the size premium.     

Performance Commitments of Controlling Shareholders and Earnings Management

Since the Split Share Structure Reform took effect in China in 2005, holders of nontradable shares (controlling shareholders) have had to negotiate with holders of tradable shares (minority shareholders) to gain the liquidity right. In a typical deal reached, the controlling shareholder agrees to pay share compensation to minority shareholders and, in many cases, also pledges to meet a specific firm performance target (performance commitments). Using this reform setting, we examine the impact of performance commitments on earnings management behavior, and find the following results. First, less profitable firms have greater incentives to make performance commitments that help to reduce the share compensation that controlling shareholders have to pay. Second, firms entering into such commitments engage in earnings management to meet the promised performance target when actual performance falls short, and firms facing greater default costs tend to manage earnings more aggressively. Third, depending on the performance metric stipulated in the commitment contract, firms employ varying methods to manage earnings. We also find that firms that rely on earnings management to meet their performance targets display inferior performance in the postcommitment years relative to firms that do not. Overall, our evidence is consistent with performance commitment contracts (with costly defaults) between a firm's controlling and minority shareholders causing incentives for earnings management.     

山东省城市农民工就业现状研究——基于烟台及周边县市的调研

文章立足于对山东烟台中小企业的调研结果，阐述了城市农民工的就业现状。在调研过程中，发现了一些问题，有的是具有普遍性的，比如民工荒的出现，企业人员流动性大等，有的是基于烟台本土现实的，比如，大多企业实行计件工资制、地方政府职能缺位等。针对这些问题，也提出了相应的政策措施，从政府和企业两个方面分四个层次来说明。     

Trade credit and ethnicity: Case of ethnic minority area in China

Using data for trade credit practices, this work investigates interfirm trust formation by ethnic minority firms in the Xinjiang Uygur Autonomous Region, China. The main findings of this research are as follows. First, there is a general ethnic bias against ethnic minority firms in receiving trade credit. Second, ethnic minority firms are less eager than Han firms to build interfirm trust with their business partners by offering trade credit, which is partly due to their financing constraints. Third, ethnic minority firms have less trust of other ethnic minority firms in offering trade credit. Fourth, these trade credit practices by ethnic minority firms tend to be more pronounced in those surviving after 2005. Fifth, ethnic minority firms do not share their members' information regarding productivity within their circle of ethnic minority firms. Overall, interfirm trust is insufficiently formed, even among ethnic minority firms.     

Social capital of black business owners

Analysis of data from the 1982Characteristics of Business Owners Survey reveals that there are some differences between the social capital (social resources available from group support networks) of black business owners and those of other ethnic groups. Black owners have had less exposure to entrepreneurial role models and training in firms run by close relatives than Asian, Hispanic, or nonminority male owners. They do not rely on their relatives or friends for business loans to the same extent as Asians, and show less such reliance than the other groups as well. Black owners compare favorably with Hispanics and nonminority males in using family funds as a source of nonborrowed capital, but are behind Asians. Black firms are relatively more likely to sell to minority customers and hire minority employees. Finally, black owners are the least likely to be married, which indicates some diminished help from the family, a key institution in group support networks.     

Global value chains and servicification of manufacturing: Evidence from firm-level data

Recent literature on global value chains (GVCs) has mainly focused on manufacturing firms’ global sourcing and investment strategies. Our question here is that, if the manufacturing firms established foreign manufacturing plants and engaged in sourcing inputs and exporting outputs, have they changed their domestic employment composition toward service workers? This is what we call servicification of manufacturing firms in this paper. To answer this question, using Korean firm-establishments matched data, we examine changes in the shares of service employment in manufacturing firms from 2008 to 2013, when those firms are participating in both import-and-export and foreign direct investment (i.e., GVC firms). We find that the two-way trading firms that own manufacturing plants in foreign countries—and particularly in nearby foreign countries—have changed their domestic employment structures to increase the number of service workers they employ. Moreover, the relatively greater increase in the share of R&D workers than of wholesale-and-retail workers serves as further evidence of the servicification of domestic manufacturing. Overall, our findings suggest that Korean firms who engage in GVCs through both trade and foreign direct investment have reorganized domestic labor structure to be able to provide high value-added headquarter services for their manufacturing plants that are closely located in foreign countries.     

Japan's elderly small business managers: Performance and succession

We investigate the effects of succession from an elderly to a nonelderly small business manager using firm-level data for Japan. The number of elderly small business managers has increased in Japan with the aging of the population; therefore, succession to younger managers has become an important policy issue. We make use of data for 2001–2015 for 188,021 small businesses, of which 77,773 at some point have a manager aged 60 or older and 8711 of these transition to a manager of under age 60. First, we investigate the relationship between firm performance and manager age. Performance is found to be lower for firms with elderly managers. Second, we estimate the determinants of succession in small businesses with elderly managers, showing that larger, less leveraged, more cash-rich, and profitable firms are more likely to transition to younger managers. Our results imply that more poorly performing firms are less likely to replace elderly managers, suggesting that such firms are not selected by young managers. Third, we examine post-succession performance using propensity score matching. Succession from elderly to young managers is shown to have positive effects on sales, employment, assets, return on assets, capital investment, and cash holdings. These results imply that succession improves firm growth. Furthermore, young successors tend to accumulate cash holdings implying that they are more risk averse and/or face tighter credit constraints than their predecessors.     

Small firms and local economic development in South London

A growing body of literature has identified a number of potential constraints on small firm growth. Arguably, the severity of these constraints is closely related to the differing fortunes of industries and firms and the extent of localised external economies or diseconomies. This paper looks at the constraints facing manufacturing and business service firms in a large urban area. The paper draws on findings from a survey of small firms in Croydon. Data from the survey reveal some differences between small manufacturing and service firms in their experience of the urban environment. Physical constraints on expansion and labour shortages appear to be hindering small manufacturing firms in Croydon. Deficiencies in specific niches of the local business service sector may be preventing small business service firms from complementing and enhancing their internal capabilities. The problems facing small firms in Croydon and the sorts of local policy initiatives being developed are likely to be applicable to other large urban areas.