Crime's Impact on the Survival Prospects of Young Urban Small Businesses

Abstract

The authors investigate the empirical link between prevailing levels of crime and the viability of small businesses. Using confidential microdata from the U.S. Census Bureau's Characteristics of Business Owners Survey, they find, on balance, that young firms operating in high-crime niches in urban America appear not to be disadvantaged by crime. Crime's impact may certainly be harmful, with other factors being constant, but the crux of the findings is that other factors are not constant. Firms most negatively affected by crime do not appear to be less viable than otherwise identical firms reporting that crime has no effect on their businesses. High-crime niches may in fact be rational choices for some business owners, present and potential.

Keywords

crime impact small business

Get full access to this article

View all access options for this article.

References

Bates, T. (1989). Small business viability in the urban ghetto. Journal of Regional Science, 29(4), 154-171.

Bates, T. (1990). Entrepreneur human capital inputs and small business longevity. Review of Economics and Statistics, 72(4), 551-559.

Bates, T. (1997). Race, self-employment and upward mobility. Baltimore: Johns Hopkins University Press.

Boston Consulting Group. (1998). The business case for pursuing retail opportunities in the inner city. Boston: Initiative for a Competitive Inner City.

Bruderl, J. , Preisendorfer, P. , & Ziegler, R. (1992). Survival chances of newly founded organizations . American Sociological Review, 57(2), 227-242.

Craig, B. , Jackson, W. , & Thomson, J. (2007). Small firm credit market discrimination, SBA guaranteed lending, and local market economic performance. Annals of the American Academy of Political and Social Social Science, 613, 73-94.

Fairlie, R. , & Robb, A. (2007). Why are Black-owned businesses less successful than White-owned businesses: The role of families, inheritances, and business human capital. Journal of Labor Economics, 25(2), 289-324.

Fairlie, R. , & Robb, A. (2008) Race and entrepreneurial success: Black-, Asian-, and White-owned businesses in the United States. Cambridge, MA: MIT Press.

Greenbaum, R. , & Tita, G. (2004). The impact of violence urges on neighborhood business activity. Urban Studies, 41(13), 2495-2514.

10.

Headd, B. (1999). The characteristics of business owners database, 1992 (Working Paper No. CES-WP-99-8). Washington, DC: U.S. Census Bureau, Center for Economic Studies.

11.

Immergluck, D. (1999). Neighborhood, race, and capital. Urban Affairs Review, 34(2), 397-411.

12.

Jovanovic, B. (1982). Selection and evolution of industry. Econometrica, 50(2), 647-670.

13.

Levi, M. (2001). Business, cities, and fears about crime. Urban Studies, 38(4), 819-868.

14.

Porter, M. (1995). The competitive advantage of the inner city. Harvard Business Review, 73(3), 55-71.

15.

Porter, M. (1997). New strategies for inner-city economic development . Economic Development Quarterly, 11(1), 11-27.

16.

Squires, G. (1999). Racial profiling, insurance style: Insurance redlining and the uneven development of metropolitan areas. Journal of Urban Affairs, 25(4), 347-372.

17.

U.S. Census Bureau. (1997). 1992 economic census: Characteristics of business owners survey. Washington, DC: U.S. Government Printing Office.

18.

U.S. Census Bureau. (2006). 2002 economic census, survey of business owners. Washington, DC: U.S. Government Printing Office.

19.

Wilcox, P. , Land, K. , & Hunt, S. (2003). Criminal circumstance: A dynamic multicontextual criminal opportunity theory. New York: Aldine de Gruyter.

20.

Yoon, I.J. (1997). On my own. Chicago: University of Chicago Press.