‘Why Even Bother Trying?’ Examining Discouragement among Racial‐Minority Entrepreneurs

Abstract We extend organizational research on racial‐minority social and economic inequality by developing a mixed embeddedness perspective to investigate whether and why certain racial‐minority entrepreneurs become discouraged with important entrepreneurial tasks – namely, seeking capital from financial institutions. Concretely, we examine borrowing discouragement among three predominant racial‐minority entrepreneur groups in the United States – African Americans, Hispanic Americans, and Asian Americans – using two independent samples from the US Federal Reserve Board. Our findings indicate that African Americans and Hispanic Americans are more likely to be discouraged than White Americans, while Asian Americans are less likely to be discouraged than African Americans. Our theory and findings suggest that for certain racial minorities, socio‐historical experiences and shared knowledge of inequalities may influence individual behaviour through increasing discouragement toward important opportunities and entrepreneurial tasks.