A Different Business Model

This presentation is based on a socio-economic survey conducted of businesses in the Italian Market in South Philadelphia. The data reveals that immigrant businesses in the area follow a business model which is defined by low-risk and low-return, and focused primarily on long-term survival rather than profit. This study challenges the basic theoretical model of a firm whose goal is to maximize profit to accumulate more capital. These firms will often forgo opportunities for greater profit which come with high risks - such as access to bank loans -- in exchange for low risk, low return and the assurance of steady income over time. Such behavior leads to low levels of immigrant firm growth. However, the Italian Market area has been economically and socially "revitalized" because of the immigrant business population. These firms are crucial to the overall growth of the neighborhood and the city as a whole. Hence, our survey shows that firm growth and urban growth are not necessarily positively correlated. In this case, urban economic growth is propelled by businesses which do not themselves grow. The reverse may also be true: Fast-growing businesses may not lead to urban revitalization. This study challenges the basic premises of the "Growth model" of urban revitalization which argues that urban economic growth is dependent on attracting high-growth businesses to the area. Our study suggests that neighborhood level economic development and revitalization is not a direct outcome of highly-profitable firms.