The impact of status on the resource position and financial performance of small and minority-owned enterprises

Abstract

Utilizing the resource-based view and social stratification theory, this paper analyzes the impact of enterprise owners’ societally-imposed status on the resource position and financial performance of their small enterprises. We find significant differences exist between firms owned by high and low strata (non-minority and minority) entrepreneurs in firm performance and value—even among similarly sized firms—and that the entrepreneur-owner’s imposed strata or status predicts enterprise resource position, firm value, and firm performance. We also find that entrepreneur-owner education moderates the relationship between status and small firm performance, which has potential implications for which policies and programs may be most effective to improve entrepreneurship performance among lower-resourced SMEs or minority-owned enterprises. Finally, findings from this study suggest that future research should investigate status as a determinant of access to additional resource position elements not examined here—including capital access, high-power network access, and innovative capacity. Such extensions would facilitate greater understanding of how status as a key resource position element affects a broader range of resources that fuel SME growth and innovative potential.