Tackling the question of why minority-owned businesses don't grow to full potential

By Jayme Blaschke

The Texas economy has a problem. In recent decades, the number of minority-owned businesses increased substantially with many minority populations doubling the number of new entrepreneurs. Despite this robust entrepreneurial culture, minority-owned businesses tend to remain small. They do not grow, or scale, at the same rate as non-minority-owned businesses.

Because Texas ranks second nationally in the number of minority-owned businesses, this failure to scale results in significant economic underperformance for the state. Consider the raw numbers from the U.S. Department of Commerce: If minority-owned businesses nationally grew at the same rate as non-minority-owned businesses, generating equal revenues and employment rates, the impact would equate to an injection of more than $5 trillion in additional revenue into the economy with more than 20 million additional jobs created.

josh daspit headshot
Dr. Josh Daspit, Associate Professor, Department of Management

“What’s interesting is on average, minority-owned businesses tend to start small and remain small,” says Dr. Josh Daspit, an associate professor in the Department of Management and a founder of the Sustainable Cultivation and Advancement of Local Enterprises for Underserved Populations (SCALEUP) program, a new initiative at Texas State designed to research the factors restraining minority-owned business growth and develop remedies. “From my perspective, this is an opportunity where the university is uniquely positioned to make a difference. If SCALEUP can make even a small impact on those numbers — just a small percentage increase — that would be substantial.”

Operating under Texas State’s Center for Innovation and Entrepreneurship (CIE), SCALEUP was initially proposed under the university’s Big Ideas initiative. SCALEUP was identified as a program that leveraged Texas State’s existing multidisciplinary resources while serving the region with a long-term vision of positioning the university as a leader in the area of minority entrepreneurship. Alongside Daspit, SCALEUP also benefits from the participation of Dr. Rob Konopaske, associate professor in the Department of Management and director of the Institute for Global Business. Soon the program will be expanding to include a multidisciplinary research team. A goal is for SCALEUP to approach its mission with a holistic perspective.

“What the CIE is interested in doing is connecting and supporting all kinds of programs across the university that are designed to connect our faculty, our students, and alumni with the power of entrepreneurship,” explains Dan Roy, entrepreneur-in-residence in the McCoy College of Business Administration and CIE co-director with Dr. Shannon Weigum, associate professor in the Department of Biology. “A program like SCALEUP aligns beautifully with the fact that a majority of Texas State’s student body consists of minority students and the university is investing in entrepreneurship research and programs. For us to conduct breakthrough research around why those businesses fail to scale at the same rate as others, we have an opportunity to be thought leaders in this area while helping minority businesses reach their full potential.”

The next step is to secure funding for SCALEUP. The new program is pursuing an array of grants to help finance its ambitious research and outreach plans, but SCALEUP is also open to working with donors — individuals as well as corporations — to offset the costs of the program at various levels.

“The first phase of SCALEUP is focused on research, so once funding is in place, we can immediately start investigating why some businesses are not growing at the same rate as others,” Daspit explains. “Once the research findings are in, we will then begin developing our outreach programs.

“Research is a core component, but we also want to translate that research into useful insights for students through co-curricular programming as well as for business owners through workshops and outreach programs,” he says. “The SCALEUP program has exciting potential to help small-business owners, locally, regionally, and beyond.”