The racial gap in entrepreneurship and opportunities inside established firms

Yang, T and Kacperczyk, O (2024) The racial gap in entrepreneurship and opportunities inside established firms. Strategic Management Journal, 45 (4). pp. 745-774. ISSN 0143-2095

Abstract

Racial disparities in entrepreneurship have been widely discussed in the literature, with most studies focusing on mechanisms that amplify such disparities. However, less attention has been devoted to factors that promote inclusion. We propose that intrapreneurship—launching and operating new ventures inside established organizations—represents a more inclusive entrepreneurial pathway than entrepreneurship involving a standalone venture. We predict that relative to White employees, Black employees will (1) be more likely to engage in intrapreneurship than entrepreneurship and (2) achieve greater financial performance as founders of internal ventures than standalone ventures. Using data on a representative sample of American new business founders in 2005, we found supportive evidence for our theory. We show that when racial stereotypes become more prominent as an evaluative heuristic, such as in the presence of high levels of discrimination or when other quality signals are absent, disparities between Black and White employees are less likely to increase in intrapreneurship than in entrepreneurship. Our study thus highlights the importance of intrapreneurship in leveling the playing field for racial minorities pursuing entrepreneurial activities