The rate of entrepreneurship among immigrants has been remarkable over the past 20 years. What is behind these dramatic trends and what does it mean for the future of American business?
As seen in the recent post, Exploring the State of American Entrepreneurship: A Look at the Stats, immigrant small business ownership has doubled in the past 20 years. According to the 2016 Kauffman Foundation’s Index on Startup Activity national trends report, immigrants comprised 29.5 percent of new entrepreneurs in 2016, up from 13.3 percent in 1996.
When it comes to immigrants and the American dream, where are we now?
Immigrants comprise 27.5 percent of the total entrepreneurial base in the United States, but only 13 percent of the population. And the U.S. is not alone, as one study has shown that entrepreneurs are a majority in 69 countries surveyed.
What is behind this growth in entrepreneurship? A recent Harvard Business Review article suggests that immigrants immerse themselves in cultures that are not their own, learning about new products and services that may not be available in their native lands.
Curiosity about what is available, how it is sold, and customer interests may lead to entrepreneurs making items available that are not yet a part of their new home. This cross-cultural arbitrage can result in the types of companies like Starbucks, which are now on nearly every corner but were inspired by Italian cafes. Even Red Bull was inspired by a trip to Thailand by founder Dietrich Mateschitz, who saw truckers and construction workers consuming an energy-producing drink.
Another study suggests that self-selection is the key reason behind immigrant entrepreneurship. Immigrants who are more likely to have the skills and desire to start their own business are more likely to opt to migrate to the United States.
Discrimination may be another factor. According to a study of immigrants in England and Wales, immigrants there consider the difference in paid versus self-employed likelihood in determining whether to work for themselves.
Immigrants calculate the likelihood of success, the availability of capital, and the amount of out-of-pocket costs required before choosing whether to migrate.
Are you an immigrant considering starting a business? There are several opportunities to help you achieve your dream.
- Massachusetts and Colorado, and the cities of Anchorage, Alaska, and St. Louis, Missouri, have started Global Entrepreneur-in-Residence programs. These tools allow foreign-born entrepreneurs to obtain H-1B visa status through affiliated universities. As of December 1017, the program had secured 47 visas and created 125 jobs.
- For residents from countries with an established investment treaty, the E-2 Treaty Initiative visa is another option, but usually requires the entrepreneur to have significant capital.
- You can self-petition for a 0-1 visa, the so-called “extraordinary ability” visa. However, these visas are extremely difficult to secure.
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