A recent study from the Harvard Business School combined data from the 2007 and 2012 Survey of Business Owners (SBO), the 2007-2011 Longitudinal Business Database (LBD), and the American Community Survey (ACS) to compare entrepreneurship patterns between immigrant-born entrepreneurs and native-born entrepreneurs. The study also looked closely at specific differences between second generation immigrant entrepreneurs and native-born entrepreneurs.
Why was the data combined? The SBO tracks the number and quality of jobs created by looking at: company payrolls, the use of full-time versus temporary employees, and benefit packages. The LBD provides specific insight into factors such as financing practices and other key business development components. Finally, the ACS includes different definitions of entrepreneurship and looks at SBO data on a micro level geographically.
A Few Key Findings:
- California, New York, and New Jersey are states most dependent on immigrant-owned firms: these firms represent over 40 percent of businesses in these states. The least dependent states? Montana, the Dakotas, and Idaho with less than 6 percent.
- Immigrant-owned firms generally have more startup capital than native-owned firms: According to the study “Personal savings are the most important source of capital for all firms, but this source is especially important for immigrant-owned firms.” Among immigrant-owned businesses, Asian-owned firms have more startup funds than Hispanic-owned businesses, which points ot the importance of the diverse backgrounds of immigrant entrepreneurs.
- Immigrant-owned businesses and newer businesses are more likely to operate internationally: the study looked at outsourcing, exporting, and general international activity patterns.
- Second generation immigrant-owned businesses reveal a pattern of assimilation: Second generation immigrant-owned companies fall in the middle across many of the study markers where large differences exist between native-owned businesses and immigrant-owned businesses, such as employee benefit packages, suggesting assimilation into the business culture. Additionally, second generation entrepreneurs tend to be younger and female.
- Sector representation likely to be determined by migration patterns and industrial makeup of region: The number of immigrant-owned businesses increased from 16% to 18% between 2007 and 2012, with “roughly half” of all immigrant-owned businesses operating in the accommodation and food services, retail trade, and professional and technical services sectors (native-owned businesses made up a smaller percentage of these sectors), but the study claims “the bigger differences are spatial, with ten-fold differences across states in terms of the share of businesses owned by immigrants.”
To access the full paper, please click here.
Contributed by Sughey Ramirez.