Why Immigrants Are Natural Entrepreneurs

There are 3.2 million immigrant entrepreneurs in the U.S. that employ 8 million people. What makes immigrants such great entrepreneurs?

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These are facts:

• My mother and my sister started a daycare center 26 years ago.

• My childhood friend started his own IT company. His parents opened up a laundromat.

• Another childhood friend’s parents started a franchise business (Dunkin’) back when it was still called Dunkin’ Donuts.

• They’re from Argentina, Peru, Ecuador and Taiwan, respectively.

• They’re all immigrants (or children of immigrants).

• They’re all entrepreneurs.

Naturals

Immigrants are natural entrepreneurs. Don’t take my biased word for it. Take the word of super smart people like these researchers from the National Bureau of Economic Research in Cambridge who arrived at the following conclusion in a 2020 report:

“…immigrants appear to play a relatively strong role in expanding labor demand relative to labor supply, compared to the native-born population.”

“Relatively?” Sounds noncommittal. Let’s find something more soundbite-y.

“Immigrants are God’s entrepreneurs.” - Warren Buffet and Bill Gates, in unison

OK, they didn’t say that, but they should have.

A 2012 study cited by the Harvard Business Review discovered the ensuing (this one’s real):

“In the United States, where 13.7% of the population is foreign-born, immigrants represent 20.2% of the self-employed workforce and 25% of startup founders. And according to a 2018 study by the National Foundation for American Policy, immigrants founded or cofounded 55% of the United States’ billion-dollar companies — so-called unicorns.”

Now we’re getting somewhere.

Immigrants form the most entrepreneurial segment in the United States.

Why Are Immigrants So Entrepreneurial?

This Forbes contributor had the following to say:

“…the unfamiliarity with the domestic labor market makes entrepreneurship an attractive alternative to traditional employment.”

This rings true to me.

My mom was working as a teacher’s assistant and a janitor’s assistant when she and my sister started a business. My mom wasn’t going to work her way up the corporate ladder. She could either take on another menial job or take a chance.

Of course, many immigrants, like my wife, do work their way up the corporate ladder, but many other immigrants, especially those who come to the U.S. later in life, like my mom, don’t have that opportunity. Those immigrants face a dilemma: Sisyphean subsistence or a precarious but potentially more lucrative venture.

Risk Tolerance

According to research from the Vienna University of Economics and Business:

“…the relationship between voluntary international migration and entrepreneurship is mediated by a greater willingness to take risks and, to some extent, by a greater need for achievement.”

This also tracks for me.

My parents moved to the U.S. from Argentina in 1969 in order to save enough money to start a bakery when they eventually moved back home. Now, if you’ve read any of my previous posts, you know it didn’t play out that way, but that’s not the point. Their motivation, like so many immigrants who come here, was inherently entrepreneurial.

The Dream

I’ve seen this over and over in my friends and their parents. Immigrants move here looking for greater opportunity, willing to sacrifice everything: family, friends, familiarity, comfort and money. In many cases, they even sacrifice their safety.

They come searching for The American Dream in spite of the pitiless gatekeepers and a Kafkaesque system that will grind them down to a pulp if given half a chance. They work endlessly without complaint. They do it to improve their lot in life, and they do it all without a single guarantee. What could possibly be more entrepreneurial than that?