Today the topic of artificial intelligence (AI) and economic growth is the headlines of news, and social media all over the world. As the Vice President for Diversity and Inclusive Growth at Chattanooga Chamber of Commerce, I’m keenly aware of the challenges facing historically marginalized small businesses in our city. Our organization is committed to ensuring that all businesses can be productive and profitable. That’s why I’m excited about the potential for AI to stimulate economic growth by helping businesses thrive.
Small businesses contribute 44% of U.S. economic activity and employ 47.5% of the workforce (McDonald, Mohr & Dichter, 2019). However, the costs of integrating AI may be prohibitive for many small companies. About 25% of jobs, including many held by minority workers, face high exposure to automation over the next decade (West, 2018). Activities comprising 51% of US work hours could be automated by adapting current technologies, impacting entry-level and clerical roles (Chui, Manyika & Miremadi, 2016).
One of the biggest barriers facing historically marginalized businesses is access to capital and resources. Studies show disproportionately high loan denial rates. This lack of funding stifles new ventures and growth. Only about 13% of historically marginalized businesses have adopted advanced digital technologies like AI, with lack of capital and tech expertise as key barriers (Perla, 2020). AI could expand access to funding through data-driven microlending and crowdfunding platforms. Automated lending algorithms would enable fairer risk assessments.
Connecting to corporate networks and contracts is difficult too. Historically marginalized businesses often lack relationships with procurement decision makers. AI could enable partnerships by matching historically marginalized entrepreneurs with diversity officers at target companies. Chatbots and virtual assistants could help business owners pursue opportunities by aggregating data.
Limited technology access and digital skills hinders some as well. But AI offers user-friendly platforms and tools for non-technical users. A mobile app could provide tutorials for websites, e-commerce, inventory, finances, and digital ads—no coding required!
We must be vigilant about potential algorithmic bias against marginalized groups. About 40% of AI startups have historically marginalized leaders, compared to 13% of all startups (Perla, 2020). Transparency and accountability in data practices are crucial. The goal is for AI to enrich human decisions, not replace them.
Closing digital divides remains vital too. As AI solutions emerge, expanding broadband access, devices, and digital literacy enables full economic participation. To that end, it’s important to share economic opportunities generated by AI to historically marginalized business.
Here, AI can provide personalized recommendations and coaching to help historically marginalized entrepreneurs make better decisions and avoid common mistakes. Virtual mentors could offer tailored advice on operations, marketing, accounting, and growth strategies.
In addition, predictive analytics enables historically marginalized business owners to forecast demand more accurately, optimize inventory levels, and reduce waste. By leveraging data and algorithms, small companies can boost efficiency and margins.
Finally, chatbots and virtual assistants can help historically marginalized entrepreneurs provide better customer service at lower costs by automating routine inquiries and support tasks. This allows small teams to focus on higher-value work.
Technology alone is insufficient. Changing mindsets around diversity and inclusion is pivotal, which we pursue through training, advocacy and partnerships. AI should complement, not substitute, an inclusive community.
Carefully implemented, AI can open new doors for historically marginalized businesses, stimulating economic growth. But we must engage all voices to shape ethical, empowering systems. By working together, we can build a more just marketplace where every entrepreneur can thrive.
Bibliography
Chui, M., Manyika, J., & Miremadi, M. (2016). Where machines could replace humans—and where they can’t (yet). McKinsey Quarterly.
McDonald, S., Mohr, J.J., & Dichter S. (2019). The promise and peril of AI for small businesses. Harvard Business Review.
Perla, J. (2020). AI and minority entrepreneurship: Risks and opportunities. Stanford Social Innovation Review.
West, D.M. (2018). How artificial intelligence is transforming the world. Brookings Institution.
Photo by Steve Johnson on Unsplash
Steedley led Motus Consulting USA, LLC, a management consultancy providing services to groups engaged in transformation, including nonprofits, corporations, and government entities.
A former International Fellow of the Emerging Leaders Program in the Graduate School of Business at the U. of Cape Town, S. Africa, he's also a former Research Fellow at M.I.T.'s Dept. of Urban Studies and Planning. Steedley received a B.A. from the U. of South Carolina, a M.S. in Human Services from the U. of Massachusetts-Boston and a M.A. in Sociology from Boston College.
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