Ethnic solidarity and black business: The case of ethnic beauty aids distributors in chicago

This paper examines the development of a separate economic niche for black entrepreneurs in Chicago's ethnic beauty aids industry. It argues that this economic niche developed in response to advantages black entrepreneurs had in mobilizing ethnic resources in the black community. The paper's findings lend support to general theoretical arguments stating that ethnicity, race, and other symbols for identity function as low-cost screening devices for evaluating the likelihood that trading partners will honor economic contracts, particularly in a market setting where formal market mechanisms are not fully developed. The findings are based on a series of in-person interviews with Korean, Jewish and black distributors of ethnic beauty aids in Chicago. Although this paper focuses on a single market niche, its conclusions indicate that greater attention needs to be paid to the effects of social, political, economic and structural factors on minority business development.