It’s my pleasure to be here this afternoon on behalf of the Minority Business Development Agency, which is a part of the U.S. Department of Commerce. As new national recognition is being given to the growth and success of minority-owned businesses as leaders in job creation, MBDA has stepped up its game and added more efficiencies through the 40 MBDA Business Centers across the country that work with minority businesses of all sizes.
MBDA helps minority-owned firms create jobs, impact local economies and compete successfully in domestic and global marketplaces. In a nutshell, we provide access to capital, access to contracts and access to markets. However, an issue not given as much attention but equally as important is the need to create a diverse pipeline of leaders and executives throughout our nation’s corporate world.
At a time when the world is only getting smaller and markets abroad are becoming more essential to a company’s success, minorities continue to find themselves shut out at the board and executive management level. According to the findings of the Corporate Diversity Report, published by U.S. Senator Robert Menendez studying diversity management among Fortune 500 companies, women and minority representation on corporate boards continues to lag far behind the national population percentages.
Though minorities represent 35% of the population they only represent minorities represent less than 15% of Directors; 1 out of every 7 Board members is a minority. Hispanics have one of the poorest representations on Boards. They comprise about 3% of Board members, one-fifth of the 15% they represent in the U.S. population. As it relates to minorities representation among executives, minorities overall have less representation on executive teams than they do on corporate Boards, representing 10.44% of executive managers, compared to 30% of their actual proportion to the U.S. population.
African Americans represent 4% of executives, Hispanics representation is at 2.9%, Asian representation is 2.55%. These three ethnic groups are some of the most economically impactful segments of our domestic economy and abroad. For example, the U.S. African American population has an estimated buying power of $910 billion, exceeding that of countries such as Australia, Taiwan and the Netherlands.
Hispanic purchasing power actually exceeds that of BRIC countries. But more than that, these are the populations that can assist companies as executives expand their presence into lucrative markets overseas and drive a U.S. economy built to last. A point to remember: minority-owned firms are more likely to export than non-minority-owned firms. This is due to their understanding of the culture, language and customs abroad.
These firms have been a key part of MBDAs success over the last three years generating nearly $12 billion in contracts and capital for minority-owned firms leading to the creation of 16,000 sustainable jobs for all. Diversity management is critical to growth in today’s fiercely competitive global marketplace. More than 95 percent of the world’s consumers are outside the borders of the United States and in order to effectively reach them, corporations must have a keen sense of cultural awareness.
Less than one percent of America’s 30 million companies export – a percentage that is significantly lower than all other developed countries. And of U.S. companies that do export, 58 percent export to only one country. If we as a nation are to rapidly and fully recover from the worst economic depression since the Great Depression, U.S. businesses must expand their international outreach, out-innovate and out-compete the rest of the world. This can be accomplished through developing a pipeline of culturally diverse leaders that understand potential new markets abroad and connect with them for the good of company to create new jobs.