The Effect of Social Capital on White, Korean, Mexican and Black Business Owners’ Earnings in the US

Previous research on ethnic entrepreneurship suggests that social capital facilitates enterprise. This study considers how social capital affects ethnic entrepreneurs’ economic success. Using the non-public Characteristics of Business Owners Survey, I examine the earnings-returns of four groups with disparate rates of business ownership in the United States: non-Hispanic Whites, Koreans, Mexicans and Blacks. Traditional sociological approaches rooted in social capital arguments emphasise the primacy of group membership in facilitating entrepreneurial participation, which is associated with economic success. My findings suggest that social capital facilitates entrepreneurial participation; however, it is human and market capital that are essential for economic success. Furthermore, I find that social capital sometimes has a detrimental effect on earnings. The article underscores the crucial role of human and market capital and the limits of social capital in facilitating entrepreneurs’ economic success.