Money&Race in Business
The Effect of Wealth and Race on Start-up Rates
This essay was made based on the article “The Effect of Wealth and Race on Start-up Rates” for the Small Business Research Summary, from the United States, but it also turns out to be an outburst of a non-white Latin American woman who’s about to start a business in a white European country.
While reading the mentioned article, I remembered a conversation I had with my neighbors, also students here in Finland and non-white, they told me: “your business is never going to work in Finland if you are the face of it. If you don’t have the Finns”. I’ll never forget their words, even though I know that life is challenging in so many ways for all of us and that we should take the good things out of our inner and outside challenges, I keep thinking of the possibility that they could be right.
There are some important facts that come to my mind while writing, the first of them is how distinct my culture is from Finnish culture and how we deal differently with money. In my country, saving money is a really difficult thing due to many factors, and we just try to enjoy our moments as much as we can, with or without them. What I feel and see in this short time I’ve been in Finland is that independence comes earlier for Finnish teenagers/young adults because your country is able to provide that through high-quality education and many other factors. In my country, most people don’t live in a reality that they can make long-term plans with their money, many of them just need to put food on the table for their families.
This was never my case, I was always privileged, but once you come from a reality that your own kind suffers so much because of money, your perspective changes. In some sessions, we talked about how money is our friend and not our enemy and that’s a philosophy I do not agree with. Maybe for privileged white people that is true, but for the majority of the world, money is the problem or the lack/bad distribution of it. The world was built in a way that few can enjoy the good things money brings. It’s essential to remember that the people who can enjoy it are majority white.
Since the second situation is my reality now (besides the huge fact of not being white), I have to go towards the second important fact that comes to my mind. Once I acknowledge my new reality and everything that surrounds it, I take many good things from it, like how much I have already grown by living with people with such a different mindset than mine, and in that way, I’m on my privileged spot of own personal growth process all the time.
Money is an extremely important matter to me. I’m always thinking about it and sometimes I’m overwhelmed. I see that my perspective of money is different from my Team’s perspective in so many ways and I believe this difference comes from how much I have seen that the world can be cruel. And everything I hear at Proakatemia or somewhere else makes my mind relate with the reality of poor countries and how much I wish they had everything Finland and Finnish people do.
Saying all that, how can I outcome all these thoughts and facts in order to make my business successful, in order to make money? If the color of our skin already makes us so different by the eyes of other people and gives us different opportunities? “For example, the percentage of employed black and Hispanic people that work in their own businesses is one-third less than the percentage of self-employed nonminorities (Fairlie, 1999).” This quote, even if a bit outdated, can make a clear picture of the reality, which gives strength to my criticism and questions since it’s not only a loose thought said by me.
The article mentioned in the first sentence of this essay talks about the influence of wealth and race in entrepreneurship. It is about how systematic wealth helps non-minorities (white) to handle fewer difficulties or even achieve success easily than minorities. The research data was the Panel Study of Entrepreneurial Dynamics, which was developed specifically to understand entrepreneurship in the USA.
The most real and suitable theory of the article is the one that talks about institutional barriers. For those who don’t know what institutional racism is, a quick answer of what those institutional barriers would be, according to Google: “racial discrimination that has become established as normal behavior within a society or organization.” Institutional racism is in everything, all society sectors have it, in North Europe or South America, whether within how banks see the non-white entrepreneurs, till education and health care systems. Thus, institutional racism makes life in general much more difficult for non-whites, since white people, besides being white, are wealthier in general, also due to historical reasons, so they are “naturally”, or “socially” able to achieve success more easily.
The research analyzed 14 factors, as net wealth, net wealth quartiles, minority status, minority status net wealth, a parent that is an entrepreneur, formal business plan, high technology states, household size, ask other or financial institutions for funds, experience in the industry of start-up, organized start-up team, education, gender, dependent variable: status of a business. The most important part in my point of view is the following statement: “Minority nascent entrepreneurs with low levels of wealth were found to be more likely to fail in their attempts to start a business, also stating that race is an extremely significant predictor of opening a business, regardless the level of wealth”.
In reality, a non-white person can have as much money or study level as a white, or even more, but most of the time this is not enough to beat the institutional racism, and the first one is more likely to fail. According to the article, “results show that the odds of a minority person opening a business are 55 percent lower than those for a nonminority individual”.
After this brainstorming, I can’t help to think if I’ll be able to make money and support myself as an entrepreneur in a country like Finland because those problems happen worldwide. I don’t know if my business is ever going to be as supported as a white person business, even in a great community as Proakatemia, since I have even heard people joking about my Team being the “weird” team. But that’s all a work in progress. Money and race are extremely related and they both change someone’s life, for the better or not. I’ll always have this on my mind, wishing to be an exception to the rule, working and criticizing as much as I can.
Fairlier, R., Robb, A., Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital, 2004.
Salazar, M., The Effect of Wealth and Race on Start–up Rates. SBA Office of Advocacy, 2007.