Are Immigrant Entrepreneurs More Innovative?

Photo by Xianjuan HU on Unsplash

Yes, according to the National Bureau of Economic Research’s working paper “Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector”. The main finding suggests that immigrant entrepreneurs are more innovative than the average high-tech entrepreneur. Of the 16 innovation criteria measured, immigrants scored better on all but one.

Here are a few takeaways that stood out to me for those who don’t want to read the whole paper:

1. Over 19% of owners of high-tech firms are immigrants, higher than the share of immigrants in the general U.S. population, about 14%*.
2. Indians are the largest group of immigrant entrepreneurs, at 36%. They are followed by white immigrants (33%) and Chinese immigrants (10%).
3. Over half of immigrant owners have an advanced degree, compared to 27% of the native-born population. What's more, the immigrant advantage in innovation measures persists when controlled for education and other owner characteristics.
4. In terms of motivations for entrepreneurship, immigrant owners are more likely to cite the inability to find a job as a reason though this is less pronounced for the high-tech sector. Immigrants are also more likely to say that they have always wanted to own the business as a lifelong dream.
5. In terms of startup capital, immigrants tend to be better funded. Immigrants are 43% more likely than natives to have financings in the $1 to 3 million range, and 60 percent more likely when financings are more than $3 million.
6. Immigrant entrepreneurs tend to operate younger firms, and while the study finds that firm age is negatively correlated with innovation, the immigrant advantage persists when controlled for firm age.

Thank you to the authors of this paper (J. David Brown, John S. Earle, Mee Jung Kim, and Kyung Min Lee) for shining the spotlight on immigrant entrepreneurship!

*The working paper cites 16% as the proportion of immigrants in the general population. Other commonly cited statistics put this figure closer to 14%.