Industry clustering and the survival of minority-owned businesses: evidence from retail and hospitality sectors

Minority-owned businesses (MOBs) play a vital role in local economies but face persistently higher failure risks due to structural disadvantages. We examine whether industry clustering mitigates this survival disadvantage. Drawing on theories of industry clustering and firm heterogeneity, we argue that clustering generates demand spillovers, labor pooling, and legitimacy benefits that are disproportionately valuable for resource-constrained firms. Using longitudinal establishment-level data on retail and hospitality businesses in the San Francisco Bay Area from 2011 to 2020, we employ survival analysis and address selection concerns. We find that industry clustering significantly attenuates the survival disadvantage of MOBs.