Immigrants are more likely than the general population to become entrepreneurs because they are more willing to take risks when they leave their home countries to seek a new life elsewhere. Peter Vandor, the senior researcher, and lecturer at the Vienna University of Economics and Business, writes that voluntary international migrants are more likely to have entrepreneurial personalities.
The Journal of World Business recently published a study that found that international immigrants are exceptionally inclined to start businesses and to do so at a much higher rate than their native-born counterparts. The entrepreneurs who founded those businesses are shining examples of a broader trend. Researchers found that immigrants were more likely than natives to start a business in most 69 countries they studied.
There are 20.2 percent of self-employed immigrants and 25 percent of startup founders in the United States, where 13.7 percent of the population is foreign-born. A study published by the National Foundation for American Policy found that immigrants founded or cofounded 55% of billion-dollar companies in the United States.
The high level of entrepreneurship among immigrants over the years has been attributed to a variety of reasons.
Diversity and Social Networks may Motivate Immigrant Entrepreneurs.
As immigrants were unable to work in the current labor market, it was assumed that they would start their businesses to support themselves. There was also a widely held belief that immigrants who relocate to another country are more likely to take advantage of their social networks. According to this explanation, immigrants’ social networks enabled them to access the financial capital, knowledge, and human resources necessary to start a new business.
Moreover, those with entrepreneurial personalities are more likely to immigrate. People with some personality traits are more likely to migrate, and these same personality traits are also more likely to start a business.
Statistical analyses confirmed that a high willingness to take risks contributed significantly to results when age, gender, entrepreneurial experience, and other factors were controlled. Further findings suggested that self-selection effects might extend to personality traits associated with entrepreneurial and labor market success. For example, individuals with high achievement motivation were far more likely to migrate and plan on becoming entrepreneurs at some point in their lives than others.
Immigrant Entrepreneurs Benefit from Business Consultants
Several venture capital firms have started funds that only work with ventures founded by or cofounded by immigrant entrepreneurs in recent years, such as Unshackled Ventures and OneWay Ventures. Their services include visa and legal advice, in addition to startup support, tailored to the needs of foreign-born founders.
According to my study, their investment rationale is straightforward and strongly supported. According to OneWay, immigrant founders can build globally reaching ventures because self-selection gives them an advantage.
The Takeaway
Creating an entrepreneurial business can provide upward mobility and integration opportunities for immigrants and return immigrants. As a result, a greater number of jobs are created, and innovations occur in society overall. Perhaps it could even lead to the development of a new type of vaccine to combat global pandemics.