How the World Gets Better with Businesses Led by Diverse Leaders
Many say small businesses are the backbone of our country.
It rings true. As small business entrepreneurs based in Portland, Oregon, and advocates for the Benefit Company and Benefit Corporation movement, we are inspired daily by the innovation, perseverance, commitment and passion we see among small businesses. They build and grow healthy communities every day.
In 2016, there were 28.8 million small businesses, which accounted for 99.7% of U.S. businesses. According to the U.S. Small Business Administration:
Small companies provide 50% of private-sector jobs and 44% of the U.S. payroll; are also highly productive, resulting in 13 times more patents per employee than their large corporate competitors.
And, as our country becomes more diverse, we celebrate the rise of small businesses owned by people of color. They bring creativity, imagination, and different perspectives that enrich the business world. These businesses are often closely aligned with the “triple bottom line” of people, planet, profit.
A 2016 report from the Kauffman Foundation cited by CNBC found that the number of Latino entrepreneurs has doubled since 1996 to 20.8% of all new entrepreneurs. In addition, immigrants are twice as likely as native-born Americans to start a business.
For us, they represent a foundation and source of fresh new ideas and experiences…a way of thinking and problem-solving that is in lockstep with the Benefit Corporation Movement. Driven by cultures that gravitate towards more collective problem solving, rather than an individual “rock star” mentality, these businesses run and managed by diverse leaders often include a commitment to the “common good.”
These are foundational pillars of a Benefit Corporation.
Leaders of Color are Changing the Leadership Paradigm:
According to an HBR Leadership article, “Tapping the Hidden Strengths of Minority Executives,” many professionals of color believe involvement in the community, supporting the greater good is an important, inherently satisfying and critical part of their business lives. For some, it’s a way of giving back.
Other research reveals that the inherent leadership style is different.
Diverse leaders tend to adopt a nurturing, inclusive, engaging and inspiring leadership style that falls under the umbrella of "transformational leadership."
For example, American and Western European cultures tend to be individualist, meaning that they tend to value the action and freedom of individuals. East Asian and Latin cultures tend to be collectivist meaning that they value the needs of the group over the needs of the individual.
The values of many Latino leaders follow the principles of working for the “common good.” Latinos are a “we” or a collective culture, where the familia and comunidad (community) take precedence over the individual. That means that often leadership is not driven by individual success or credit but by contributing to the group welfare. This core value propels a people-oriented leadership style where the leader strives to empower the community.
Finally, some researchers have studied the impact of historical and modern-day racism and discrimination, and how it plays out in shaping leadership style. “The long history of intergenerational trauma seems to unconsciously shape the way ethnic minority leaders view and interact with the world; these experiences help to create a leadership style that is genuine and participatory in nature.”
What this Means:
Small businesses owned and managed by people of color are excellent candidates to become a Benefit Company/Corporation.
They often bring the values and reflect the spirit fostered and promoted with this business structure. We welcome them to join the movement, share their voices, management style and serve as a beacon of hope for their communities, their people and the world.
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Hetty van Emmerik, I., Euwema, M.C., & Wendt, H. (2008). Leadership behaviors around the world, the relative importance of gender versus cultural background. International Journal of Cross-Cultural Management, 8(3), 297-315.
Parker, W. P. (1976). Black-White differences in leader behavior related to subordinates' reactions. Journal of Applied Psychology, 61(2), 140-147.
Sarros, J.C., Cooper, B. K., & Santora, J.C. (2008). Building a climate for innovation through transformational leadership and organizational culture. Journal of Leadership & Organizational Studies, 15(2), 145-158.