How Institutional Intermediaries Can Help Minority-Owned Businesses Grow
TORONTO – January 20, 2022 – Business associations and other institutional intermediaries can play an important role in helping minority businesses succeed by providing training and access to large corporations, according to new research from York University’s Schulich School of Business.
The findings are contained in the paper, “Relationship Building and Minority Business Growth: Does Participating in Activities Sponsored by Institutional Intermediaries Help?”, which is slated for publication in Journal of Business Research. The article was written by M. Johnny Rungtusanatham, Canada Research Chair in Supply Chain Management and Professor of Operations Management & Information Systems at the Schulich School of Business; Mengyang Pan, Assistant Professor at the Research Institute of Economics and Management in Southwestern University of Finance and Economics; Ian Y. Blount, co-founder and Director of Research & Policy at the George Washington Carver Food Research Institute; and James A. Hill, Chair of the Management Sciences Department and associate professor of operations management at The Ohio State University.
According to the researchers, institutional intermediaries like the National Minority Supplier Development Council in the US are a low-cost solution that help minority business access large, established corporate members. These intermediaries also provide training designed to improve long-term viability by enhancing internal management skills and processes within minority businesses. The researchers examined 113 minority businesses as part of their study.
“Research shows that minority businesses have a lower rate of success than non-minority-owned businesses because they face higher barriers to business growth,” says Rungtusanatham. “These barriers include difficulty accessing skilled labor, acquiring financing, and entering mainstream markets.”
“Our study investigates how and why relationship building through proactive participation by minority businesses yields increased growth,” says Rungtusanatham. “One of the key conclusions is that mere membership in an intermediary does not automatically lead to greater growth. Instead, minority businesses must actively participate in intermediary-sponsored activities to build stronger social networks.”
Although the study examined minority businesses in the US, it also offers some lessons for Canada, adds Rungtusanatham: “Federal, provincial and local governments can not only help minority-owned businesses succeed by providing financial resources but also by providing the legitimacy needed to successfully supply to large corporate businesses, especially if both minority businesses and large corporate businesses have memberships through a third-party intermediary institution.”
Johnny Rungtusanatham is available for interviews. A copy of the study is available upon request.