How Institutional Intermediaries Can Help Minority-Owned Businesses Grow
According to new research, business associations and other institutional intermediaries can play an important role in helping minority businesses succeed by providing training and access to large corporations.
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 Schulich; 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.
“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.”
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.
“As we move beyond good intentions to building the capability of minority owned business to compete for business, this article is timely in suggesting who can deliver the help these businesses need and who major purchasers can work with to design supportive procurement policies and processes,” said David Johnston, Centre Director, George Weston Ltd Centre for Sustainable Supply Chains and Program Director, Master of Supply Chain Management.