The Case for Inclusive Innovation: Minority Entrepreneurship and America’s Economic Future

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  THE CASE FOR INCLUSIVE INNOVATION: MINORITY ENTREPRENEURSHIP AND AMERICA’S ECONOMIC FUTURE BY: ALEJANDRA CASTILLO, NATIONAL DIRECTOR, MINORITY BUSINESS DEVELOPMENT AGENCY  “If our nation is to remain globally competitive, we must leverage and
Created on May 17, 2016
 

Featured in the National Urban League 2016 State of Black America

What images come to mind when you read the words “innovation” and “entrepreneurship”?

If your primary points of reference are popular media or trade press, you might envision a fresh-faced 20-something-year-old on the leafy campus of a private university.

But, as the daughter of a Dominican Republic-born entrepreneur who came of age in the Bronx, I have a different take on American economic development, entrepreneurship and innovation.  As the National Director of the Minority Business Development Agency at the U.S. Department of Commerce, I can accurately report that African-Americans, Latinos, Asians and Native Americans now represent the fastest-growing segment of entrepreneurs in the United States. 

As the National Urban League releases this important annual look at opportunity in Black and Latino communities, I’ll make the case for why America is at a major inflection point in terms of minority entrepreneurs.  Our nation’s demographic profile is quickly transforming to ‘majority-minority’ status with a plurality of African Americans, Latinos and Asians already comprising majority populations in several U.S. states.  This demographic change coincides with yet another major shift, one characterized by the many technological innovations and science-based businesses driving global commerce and education, not to mention a growing millennial generation that is embracing entrepreneurship as part of their DNA.  These many factors are leading the way for minority entrepreneurs and minority-owned businesses to position themselves within an eco-system that can create opportunities to diversify into new industries, build capacity and ensure scale, particularly in STEM or technology-based fields.

However, barriers to necessary pipelines in education, capital and sustainable resources that allow minority-owned businesses to grow and expand are well-known by now.  They are outlined in painstaking detail by the National Urban League and my fellow contributors to this report.

The time is now to ensure that we create the synergy towards solutions.  It is well documented that there are economic and social multiplier effects when we support an environment that promotes inclusion and growth of Minority Business Enterprises (MBEs) through equitable distribution of opportunities and resources.  Ensuring MBEs are integral to a strategy that promotes economic inclusion, diversification among industries and helping them grow in size and scale begins to change the national debate beyond a deficit-based approach, in which poverty is the lens by which we evaluate and value our minority communities, towards one that embraces an asset-based approach, grounded in innovation, capacity building, jobs, ownership and wealth creation.  

We need to change the paradigm of how we discuss economic development and entrepreneurship among minority communities.  As I travel the country visiting our 44 MBDA Business Centers, I see the many MBEs seeking greater access to capital, contracts and markets.  I witness the opportunities to help MBEs become drivers of the industries of tomorrow.  I see the changing face of America’s business community.

The U.S. Census Bureau reports that within a few years, the U.S. population will be ‘majority-minority’ – a transformation now estimated to take place as early as 2044.  There is no question that diversity is our Nation’s greatest asset, and our position in the global economy is contingent on the growth of MBEs and their inclusion in the economic agenda – on a national and global level.  In 2012, the Survey of Business Owners reported MBEs generated $1.5 trillion dollars of economic output and created 7.2 million jobs for the nation.  For nearly five decades, MBDA has championed the vital role MBEs play in ensuring the U.S. remains globally competitive.  This holds true now more than ever in an ever-changing economic landscape where innovation, technology and trade are at the center of a 21st Century economic model.  We know that 96 percent of the world’s consumers live outside of the U.S., and if we are to place our U.S. goods into the global market place, we must also promote exports.  We also know that MBEs are twice as likely to export because of linguistic and cultural ties.  Hence, MBEs are uniquely positioned to propel our economic interests forward in unique and innovative ways.  

As the only federal bureau charged with the mission of fostering business development and entrepreneurship exclusively for minority-owned firms, MBDA embraces this charge with pride and forms partnerships with key stakeholders such as the National Urban League, a national non-profit organization that champions advocating and increasing opportunities for wealth creation, entrepreneurship and STEM advancement in minority communities.

While notable progress has been made by our agency and MBEs across the country, many of the historic barriers to economic inclusion that spearheaded the founding of MBDA and organizations like the National Urban League unfortunately remain a part of the economic landscape today.  Indeed, the theme of the landmark 40th edition of the National Urban League’s annual State of Black America report outlines the broad contours of continuing challenges, “Locked Out:  Education, Jobs, Justice.”

Still, the MBDA envisions an endless opportunity to help MBEs diversify into industries of tomorrow by placing them in the vanguard of technology and innovation today.

At MBDA, we wholeheartedly believe in utilizing disruptive innovation, entrepreneurship and data as tools for fostering growth and prosperity among MBEs.  The question we must ask ourselves is, what does the national economic data reveal?  Also, how will this data help us design and implement better policies and programs to face the changing demands to the growth of MBEs?  The recently released Survey of Business Owners conducted by the Census Bureau (2015) reports that between 2007 and 2012, the number of minority-owned firms increased 38 percent while the total gross receipts increased 53 percent.

Although the data indicates progress has been made, the data also revealed MBEs are still concentrated in traditional industries – e.g. Healthcare, Social Assistance, Administration Support, and Waste Management and Remediation – with only 10 percent of the MBEs currently engaged in growth industries – e.g. the Professional, Science and Technology.

Moreover, access to capital has historically served as the major impediment for the growth in size and scale of MBEs, and now access to capital is the major impediment for diversification of MBEs into the industries of tomorrow.  Further, research shows us that while these 21st Century, technology-based companies are a far cry from the brick-and-mortar bodega that my father owned and operated for many years in the Bronx, in spirit and in their ability to send waves of economic and social benefits rippling throughout minority communities, they are similar. 

In response to this undeniable need to increase access to capital among MBEs, MBDA created a comprehensive initiative, Inclusive Innovation Initiative (I3), that expands our agency focus from access to capital, contracts and markets to include an additional sub-focus – access to research and development (R&D) – to help MBEs better engage in emerging markets, i.e., Technology Transfer.  The I3 will use data to access research and development markets; expose minority businesses to federal labs; assist minority businesses in licensing their R&D; and help determine the capital needed to develop commercialized applications and markets.

Like the National Urban League’s leaders and members, MBDA has consistently taken a proactive approach to building the capacity of minority entrepreneurs, particularly founders and innovators, to achieve “next level” success.  The “next level” of success will be achieved through the process of minority inclusion; participation in technology innovation; formation of sustainable public-private partnerships; and equitable access to contracts, capital and markets.

To that end, MBDA partners with stakeholders such as the Federal Lab Consortium which represents more than 300 federal labs across the nation, Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs) to create an environment where MBEs have equitable access to capital and high-quality research and business development resources.  Furthermore, MBDA continues to increase the number of effective collaborations with non-profit incubators that take an inclusive approach to supporting innovative STEM-oriented companies.  MBDA’s strategic partnerships, both national and international, enable MBEs to compete and grow in regional, national and global markets resulting in the creation of U.S. jobs in historically underserved and disenfranchised communities.

These were all wonderful strides for our agency; however, the road ahead presents great opportunity and will require a monumental paradigm shift.  The well-known disparities in education, economic and criminal justice arenas, the gaps that affect so many African-American and Latino families, are real.  Yet we see and experience a shift taking place, one in which we evolve from a deficit model to an asset and innovation-driven model based in inclusion and equity and ripe with data driven approaches, meaningful partnerships and effective collaborations.

MBDA clearly sees a path to a strong and wonderful future of prosperity and unbound advancement for MBEs – and we look forward to continuing our journey of disruptive and growth-driven innovation with the National Urban League and other like-minded organizations.  Finally, we applaud the National Urban League’s tireless commitment to empowering African Americans and other marginalized populations in their pursuit of economic self-reliance, educational parity and civil rights.

 

National Urban League 2016 State of Black America

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