This project of the Women in the Workplace Research Initiative examined the role of immigrant entrepreneurs in firm creation, innovation, and job growth in the U.S. Despite the continuous and often heated debate about the appropriate rate and type of immigration for America, there has been little previous research related to the economic impact of immigrant entrepreneurs. This project provided the first comprehensive estimates of the effects of immigrants on firm starts and job creation using large-scale administrative and survey data.
Findings:
Immigrants start a large and growing share of new firms in the United States. Between 1995 and 2012, the share grew from about 16% to 25%. The role of immigrant entrepreneurs is as large (and sometimes larger) in the high-tech sector as it is in low-tech sectors.
Immigrant-founded firms are unequally distributed across the country, with large differences across U.S. cities and states. But in all U.S. states, immigrants start more firms on a per capita basis than non-immigrants.
The share of jobs that immigrant entrepreneurs create follows closely the share of firms they create. Immigrant-owned firms hire slightly fewer employees at the start, but the difference is mostly due to location and industry concentration. The jobs created by immigrant entrepreneurs pay somewhat less and provide fewer employee benefits, largely explained by their concentration in certain sectors.
Immigrant-founded firms have substantially higher rates of global engagement, ranging from the exporting of goods to the establishment of overseas operations.
Immigrant groups vary widely in terms of who they hire as early employees in these startups. Some founders (e.g., those migrating from China and Vietnam) hire almost half of their early employees from their own ethnic group, which changes little as the firm ages. Conversely, other immigrant groups (e.g., those from Germany and Canada) hire mostly American workers and/or workers from other ethnicities than their own.
In addition to Dr. Kerr’s work on large-scale administrative and survey data, she also surveyed start-up founders, CEOs, inventors, and non-inventor employees in a large multi-city co-working facility. Within the same firms, she found significant differences in personality traits across individuals in those four roles. For example, founders showed a much greater tolerance for risk compared to the other groups, as well as greater self-efficacy and openness.
Dr. Kerr’s research also showed that immigrant founders and employees valued networking more than non-immigrants, and the networks developed by immigrants tended to be larger within the co-working facility. They showed substantially greater rates of giving and receiving advice related to six factors: business operations, venture, financing, technology, suppliers, people to recruit, and customers.
Implications:
This research has advanced understanding of the importance of immigrant entrepreneurs and business owners in the U.S. economy, how their effect varies with the characteristics of the firms and firm owners, and the role of various policy factors in mediating that impact. More broadly, the project has supported research on theoretical models of the startup process, on the personality variations among startup founders and their employees, on immigration policies for entrepreneurs and high-skilled workers across the globe, and on a broader description of the changing nature of firm founders and owners over the last two decades in the United States.
