February 11, 2008 — "I'm the last person I expected to become involved in business," said Greg Fairchild, assistant professor of business administration at the Darden Graduate School of Business. "I was always a social studies kind of guy."
But Fairchild is exploring the potential for business to improve the welfare of people living in low-income neighborhoods in his path-breaking research on entrepreneurship in the inner city.
He has found that entrepreneurship rates are lowest in neighborhoods where the concentration of African Americans is highest. As middle-class blacks move out of inner-city neighborhoods and into the suburbs, those left behind are less educated. There are fewer resources — physical, intellectual and financial — available to start businesses.
Cynics might say it’s a seeming dead end. But Fairchild thinks otherwise.
Fairchild was born in El Paso, Texas, in 1961, while his father, Robert L. Fairchild Jr., an artillery officer in the U.S. Army, was posted at Fort Bliss. A graduate of the Hampton Institute (now Hampton University), the elder Fairchild was among the first black Army officers assigned to command an integrated unit during the mid-1950s.
Growing up as an Army kid, Fairchild had lived in eight different cities in Germany and the United States by the time he was 14. "I never attended segregated schools," he said. "My experience was shaped by a recently desegregated military, which created Department of Defense schools and influenced communities to integrate. The idea that firms can shape the communities in which they operate grew out of that experience.”
Fairchild’s paternal grandfather, Robert Lee Fairchild Sr., lived through the Tulsa Race Riot as a teenager. In 1921, during 16 hours of rioting, 35 city blocks were burned, more than 1,200 houses were destroyed, 10,000 people were left homeless, and about 300 African-American residents of that Oklahoma city were killed, according to the American Red Cross. It was the worst race riot in American history.
Still, his grandfather went on to college, graduating from the University of Nebraska in 1931, while Fairchild's paternal grandmother, Florence McGee, graduated from the University of Kansas in 1929. Fairchild keeps their leather-bound college yearbooks on a shelf in his Darden office.
Despite their college degrees, his grandparents found corporate America inhospitable. His grandfather went to work in social services while his grandmother taught in the public schools and worked with the Works Progress Administration during the New Deal.
Job opportunities for African Americans improved with the civil rights movement.
Fairchild's father retired from the Army as a colonel and then joined Central Fidelity Bank in Richmond, where he worked as senior vice president of community development finance. His experience there opened his son's eyes to the field.
MacArthur Foundation seeks him out
Greg Fairchild's research caught the attention of the John D. and Catherine T. MacArthur Foundation, a nonprofit institution that funds groups and individuals working to improve the human condition. In late 2007, the foundation awarded Fairchild a three-year grant of $850,000 to undertake a study of community development financial institutions, nonprofit or governmental organizations that provide financial services to low-income customers.
He is one of the first management theorists to explore segregation's effect on self-employment and entrepreneurship and make sense of it, said R. Edward Freeman, Elis and Signe Olsson Professor of Business Administration and co-director of the Olsson Center for Applied Ethics at Darden. "He's also addressing the question of what to do about it," Freeman said.
Beyond his teaching, research and publishing in academic journals, Fairchild's work also may have an impact on public policy, said Robert Bruner, Charles C. Abbott Professor of Business Administration and dean of Darden. "Fairchild's work on emerging domestic markets will shed light in an important area, not only for scholars, but also for policymakers and business people.”
Many of the entrepreneurs and investors Fairchild studies feel a certain tension as they work to bridge two worlds — that of the minority small business owner and that of the white investment banker. Similarly, Fairchild experiences a tension in working on topics relating to low-income neighborhoods in an academic environment that traditionally has focused on topics of interest to high-income individuals.
"Much of the research done in business schools focuses on initial public offerings, CEO behavior and CEO compensation packages in large organizations," Fairchild said. "While business scholars tend to study race in the context of individual corporations, I'm interested in the interactions between businesses and communities — how the business sector influences the lives of poor and middle-income people, and how the racial dynamics of inner-city communities affect the businesses in their midst."
Business as agent for change
After graduating from Virginia Commonwealth University, Fairchild went to work for the flagship store of Saks Fifth Avenue in New York. He completed an M.B.A. at Darden, then worked in brand management for Procter & Gamble Co. and for Kraft Foods Inc. Next, he headed to Columbia University, where he earned a Ph.D. in 2000.
For his doctoral dissertation, he interviewed 100 entrepreneurs on 125th Street, in the heart of Harlem’s historic black business district. Shop owners, including Asian, Arab and Latino entrepreneurs, were shaken in the late 1990s when Pathmark, a large grocery and pharmacy chain store, moved in. While many consumers were pleased with the new arrival, the shop owners felt threatened. Unsurprisingly, not all the shops survived. Fairchild found that those that did had adapted to the neighborhood’s changing demographic mix.
After finishing at Columbia, Fairchild joined the Darden faculty in 2000. In June 2006, the MacArthur Foundation invited him to a conference in Chicago on community development finance. "Some of the people there asked me why I wanted to teach in a business school," he recalled. "They told me, 'You're one of us.'"
Even as a business school professor, Fairchild believes he can make a difference.
"Business as a sector has had increasing influence over politics and government in recent decades," Fairchild said. "I want to influence the next generation of business leaders to think about these issues."