HBS Paper Shows Robust Immigrant Entrepreneurship

An April 2018 Harvard Business School working paper surveying multiple studies and data sources finds that first-generation immigrants represent about 25% of new business creation nationwide, and in some states, about 40%.  These figures far exceed the approximately 14% share that the foreign-born represent of the entire U.S. population.

While indications are that the smallest of these businesses are family operations offering fewer employee benefits and hiring fewer workers than native owned businesses, overall, immigrant owned businesses were somewhat more likely to survive and to grow than those created by U.S. natives during the years examined.  The data also indicated that first-generation immigrant entrepreneurs, compared to their U.S. native counterparts “are more likely to engage in R&D and innovation. Immigrant-owned firms are more likely to file for patents, and their innovation advantage is especially high within the college-educated group.”  The working paper notes that immigrant entrepreneurship is consistent internationally, with data from countries such as the U.K, Canada and Australia showing higher rates of business creation by first-generation immigrants than by their native born populations.

The working paper echoes findings from previous reports on the outsized influence of immigrant entrepreneurs, such as studies showing that nearly 50% of Fortune 500 companies were founded by first-generation immigrants or by their children.

Current U.S. policy trends discouraging immigrant entrepreneurship, and raising barriers to immigration to the U.S. generally, fly in the face of the long history, and continued prevalence, of immigrant business creation and the economic vibrancy that immigrants contribute to the U.S.