Indigenous-owned businesses: Survival rate and performance

Released: 2024-11-18

The growth of Canada's Indigenous population from 2016 to 2021 did not lead to a significant increase in business ownership within this population. Challenges such as limited access to capital, financial barriers and higher operational costs in remote areas may contribute to the disparity between Indigenous population growth and Indigenous business ownership prevalence. Studying the performance of Indigenous-owned businesses is crucial for understanding how they manage these issues and for identifying ways to enhance their resilience and sustainability.

The paper "Survival Rate and Performance of Indigenous-owned Businesses" found that, while the performance of Indigenous-owned businesses has improved over time, they were 7.5% less productive and had 2.7% lower revenues, on average, than their non-Indigenous-owned counterparts from 2005 to 2018. This performance gap was more than two times higher in rural areas than in urban centres. The paper also found that Indigenous-owned businesses were, on average, almost one-fifth (18.4%) more likely to exit the market compared with non-Indigenous-owned businesses.

The data were gleaned from the Canadian Employer-Employee Dynamics Database, which measures business ownership characteristics, including Indigenous identity, from 2005 to 2018.

The paper also highlights the possible factors driving the relatively weak performance among Indigenous-owned businesses compared with non-Indigenous-owned businesses. Financial and capability constraints are the key barriers to the economic participation and development of Indigenous-owned enterprises.

These findings may be useful for policy-makers designing policies to support the social and economic integration of racialized groups and Indigenous Peoples.

Products

The study "Survival Rate and Performance of Indigenous-owned Businesses," part of the Analytical Studies Branch Research Paper Series (Catalogue number11F0019M), is now available.

Contact information

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