Do Minority-Owned Labels Help or Hurt Minority Businesses? The Effect of Minority-Owned Labels on Purchase Intentions Depending on Consumers’ Political Orientation and Race

Minority-owned businesses suffer from systemic difficulties in operating their businesses, compared to businesses owned by White individuals. In response, some minority business owners explicitly highlight their race or ethnicity via minority-owned labels (e.g. “Black-Owned Business”, “Latinx-Owned Business”) in their marketing communication, in order to increase consumer support for their business. In this research, we explore the effect of minority-owned labels on purchase intentions, and in particular how consumers’ political orientation and ethnicity impact the effectiveness of such labels. Across 7 studies using different samples, we find that White consumers, compared to people of color (POC), are more likely to be sensitive to the use of the label, and the valence of their reaction is dependent on their political ideology. In particular, we find that White conservatives are less likely to purchase from a business that uses a minority-owned label (vs. no specific label). We provide further evidence that this effect occurs because of White conservatives’ endorsement of racial colorblindness, a system of ideas that reject race-conscious decision-making. These findings provide substantial managerial implications for businesses that would like to use diversity labels successfully