The impact of implicit bias on Indigenous business ownership rates in Australia

Abstract

Business ownership provides Indigenous Australians with an opportunity to seek economic independence and greater self determination. However, societal barriers created through systemic discrimination may limit the potential for Indigenous Australians to enter into business. While other research has alluded to the deleterious effect of a discriminatory environment on Indigenous business ownership, much of that research is qualitative and relies on the self-reported experiences of the phenomenon. This paper extends earlier quantitative research that explains lower local rates of business ownership among Indigenous people compared with other Australians using socioeconomic and demographic factors (Shirodkar and Hunter, 2019). Project Implicit developed and collected data from the Implicit Association Test that measures implicit biases against Indigenous Australians, arguably the root cause of systemic discrimination, collecting over 11,000 unique observations from Australians over a decade (Shirodkar, 2019). An ecological regression model of Indigenous business ownership finds that after accounting for other pertinent economic factors, higher rates of implicit bias in Australian regions has a statistically significant and negative relationship with Indigenous business ownership. The result suggests that the implicit biases of non-Indigenous Australians drives lower levels of Indigenous business ownership.

JEL Codes: C21, J15, J70, J71