A Promise Not (Yet) Fulfilled: Entrepreneurship, Opportunity Underexploitation, and the Reproduction of Inequality via Consumer Markets

In this paper, we offer a theory of opportunity underexploitation that explains how consumer disadvantage is coupled to the entrepreneurial process such that market inefficiencies disproportionately affect consumers from marginalized groups. We define opportunity underexploitation as a shortfall in entrepreneurial activity given an opportunity’s potential value and the availability of resources in a system. We theorize that the social closure encountered by entrepreneurs from marginalized groups, the segregation of marginalized groups from non-marginalized groups, and the stereotyping of marginalized consumer groups all produce shortfalls in both the number of entrepreneurs seeking to exploit an opportunity and the resources they mobilize to do so. In turn, these shortfalls increase the prices marginalized consumer groups pay and reduce the availability of products marginalized consumer groups desire relative to what would be expected had markets been more efficient, in addition to reinforcing feedback loops. With this theory, we interrogate the Weberian ideal of neutral markets and identify breakdowns in the process of opportunity exploitation that, when remedied, will reduce inequality through increases in the efficiency of consumer markets.