What It Is That Makes Immigrants Such Good Entrepreneurs?

I have mentioned the crucial role that immigrants play in the economic system a few times before. I recently wrote on the importance of immigrants to jobs after new research at Kellogg School of Management found that immigrants create massive employment because of their entrepreneurial abilities.

Wharton’s research elaborates on this point, pointing out how immigrant founders create jobs and bring substantial finance. According to the authors, cross-border VC investments are at an all-time high due in large part to the international nature and entrepreneurship.

Therefore, it may not surprise that recent research by MIT’s CSAIL laboratory has shown that although America is still leading the way in artificial intelligence development, most of the breakthroughs have been made by foreign-born scientists.

Researchers from North American universities made up around two-thirds (or more) of the improvements to AI in the last 70 years. Significantly, 75% of these breakthroughs in AI have come from foreign-born researchers over the past 30 years.

Immigrant entrepreneurs

Tradition has held that immigrants make great entrepreneurs. They bring new perspectives and a familiarity with the domestic labor markets, which makes entrepreneurship attractive to those not employed in traditional industries.

A new study by the Vienna University of Economics and Business examines whether self-selection is involved. Emigration is a voluntary decision by people to leave their home country. This can be dangerous because of the unfamiliarity and chance for success.

 This tolerance of risk can be precious when starting a new business. The high failure rate of all new companies is well documented. The researcher suggested that people open to risky situations would be more likely to migrate and start businesses.

Tolerance to risk

The hypothesis was tested with 1,300 students at two Austrian universities. They asked questions about their risk-taking preferences and their plans to move abroad or start a business. Twelve years later, this was followed up to see what had become of those students and how their lives had changed.

Results show that those most open to taking risks were also the most likely to emigrate and start a business. More than a quarter of the original cohort moved abroad, with many others starting a business. The chance of starting your own business was 10% higher among migrants than among students who remained in Austria.

The ratio was even higher in those who moved away and then returned to the country. Nearly half the people who took this path eventually started a business.

After analyzing the data to adjust for factors like gender and age, the researcher discovered that the willingness to create a company was strongly influenced by the desire of entrepreneurs to accept risk.

A friendly environment

This growing trend toward entrepreneurship is driving an increase in targeted support for immigrants. Unshackled Ventures, and OneWay Ventures, are two VC funds that target immigrant entrepreneurs. They provide not only financial support but also legal advice and visa assistance.

It is not an amount of support that is being matched on a policy level, however. Recent research at Vienna University of Economics and Business shows how the U.K. created a hostile environment that has driven foreign-born scientists from their shores. This exodus began with the Brexit referendum in 2016.

Research created a similar picture of the U.S. from Ohio State University. This revealed that a growing number of Chinese researchers are leaving America and bringing with them their ideas.

This study revealed that approximately 16,000 researchers from China have returned to China over the past few decades, while only 4,500 people left the United States. It’s almost twice the number of people who go each year in 2010; It is a trend helping China become a true scientific powerhouse.

Although immigrants are a great source of entrepreneurship and innovation in companies, it’s clear that there is more to be done to make them feel welcome and provide them with the right environment for success. This is something that policymakers need to keep in mind as we move on from the Covid epidemic.

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Samatha Vale
Samatha a senior writer for HC's entertainment team. She is an entreprenuer, mother and an excellent writer. She's also an avid reader, music enthusiast and all around inquisitive person - which is just a nice way of saying she's nosy.

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