In a previous article, I made a semi-academic evaluation of the link between being and immigrant and becoming an entrepreneur. My previous analysis demonstrated a direct link between immigration and entrepreneurship. 

In 2018, over 55% of US unicorns were founded or co-founded by immigrant entrepreneurs (Anderson, 2022). This percentage represented 50 unicorns with an immigrant founder or cofounder out of 91. 

Fast forward to 2022, there were 582 unicorns in the US, and again 55% (319) of them had an immigrant (co)-founder. 

Additionally, a 2012 study stated that immigrant entrepreneurs represented over a quarter of all startup founders.

As human beings, our biological instinct is to survive and evolve under difficult circumstances.  This may manifest itself in various ways. 

Immigrants and displaced people face an array of considerable socio-economic barriers and challenges. 

These challenges may be internal (e.g. mental health issues), external (e.g. employment discrimination, or both. Additionally, these external and internal may have an inverse relationship. This further complicates the conclusion of a thorough third-party perspective on this issue. 

Nevertheless, the above reflects the inherent principle behind the hypothesis that immigrants are statistically and practically more likely to become entrepreneurs. 

In this piece, I will highlight three key points concerning immigrants and displaced people. These factors range in nature and effect, but their common attribute is their contribution towards immigrants’ pursuit of entrepreneurship.

Limited opportunities / Socio-Economic barriers

Once immigrants and displaced people have arrived, and by some means have “settled” in their destination, their primary concern will be money and financial stability. Thus, they are likely to encounter and face the labour market of their new home.

Unfortunately, this is one of the early and key areas in which immigrants and minority individuals will encounter bias, discrimination and prejudice.

I shall state, that I comprehend the complex nature of this issue from a sociological perspective. However, this article does not seek to evaluate the phenomenon of discrimination. Instead, I will highlight how the existence of the aforementioned is influential in immigrants pursuing entrepreneurship and self-sustained revenue sources.

Labour Market Case Study | USA 

Numbers are always useful in providing a clear picture of a hypothesis. As such, let us consider some statistics concerning employment discrimination in the US. 

For the year 2022, the U.S. Equal Employment Opportunity Commission (EEOC) received a total of 73,485 discrimination charges. 

Of this, 34% of the cases, 20,908 charges, were based on racial discrimination. Additionally, 6,213 charges, or 10% of the entire charges for 2022, were based on national origin. 

Aside from statistics, it is useful to consider a psychological perspective on the issue of labour and employment discrimination. As such, we shall refer to a case study highlighted by Hamilton College. This study was conducted on economics doctorate students and assessed their employment outcomes against the fluency of their names. 

The research found that having an unconventional or hard-to-pronounce name limits employment prospects for candidates. In this case, those candidates were 10% less likely to secure an academic position.

Labour Market Case Study | UK 

Aside from the US, research that was undertaken in the UK reflected similar results. 

One study by the University of Oxford found that Asian and Black ethnic minorities in the UK have to make twice as many applications as their other counterparts.

Thus, we can see that labour discrimination and access to employment are real barriers for most, if not all, immigrants, whether first or second-generation. The extent of this discrimination, and therefore its effect, may be debatable; however, it is difficult to argue against the existence of discrimination in the labour market as a whole. 

Furthermore, we may also reasonably speculate that having less access to opportunities contributes to immigrants’ pursuit of entrepreneurship.

Resilience and risk tolerance

Immigration is a phenomenon that radically transforms one’s entire life and the lives of those close to them. 

Perhaps this is a relevant instance where the difference between the terms “expat” and “immigrant” may be relevant. One key difference between the two, in my opinion, is the element of “choice”.

Expats “choose” to move abroad, and can “choose” to move back to their home country. Immigrants and displaced people, by principle, do not have this “choice”.

This derives from inadequate and negative political, economic and societal conditions where immigrants and displaced people originate.

When one is encountered with a life where the choices are always between “difficult” and “more difficult”, you are likely to have a different approach towards risk. 

One of the principal factors influencing the pursuit of entrepreneurship is risk tolerance. 

Immigrants and displaced people are arguably more risk-tolerant due to the dynamics of their lives and past experiences.

This may not be a deciding factor on its own. However, the psychological attributes of immigrant entrepreneurs, which this point reflects, are an important point of consideration. 

Liquid assets & access to cash

When we speak of immigrants and displaced people, we are not referring to a collective group of people who are highly alike. 

Immigrants and displaced people could consist of upper-middle-class families with considerable liquid assets who are seeking to migrate for a better life abroad. In contrast, we may also refer to asylum seekers who are fleeing conflict such as the Ukranian refugees in 2022.

The point that I wish to highlight here is one common factor among all the different segments of immigrants and displaced people. This mutual attribute is the intention to permanently move away and establish a new life. 

As such, it is not surprising that many immigrants will seek to relocate their assets (if any). Moreover, asset liquidity is integral for international relocation; thus, immigrants and displaced people often happen to have access to liquid assets more than native populations. 

In terms of entrepreneurship and business creation, the role of capital cannot be underestimated. Many ventures will require an initial capital investment. Immigrants, due to their access to capital due to their circumstances, are therefore likely to overcome this first hurdle. 

These are some factors that motivate immigrants to become entrepreneurs. 

These findings indicate the vast potential of immigrant entrepreneurs. In an immigration context, it is important that policymakers are aware of the untapped potential of immigrants and displaced people in creating profitable businesses. 

References

US EEOC. (2023). EEOC Releases Annual Performance Report for Fiscal Year 2022. [online] Available at: https://www.eeoc.gov/newsroom/eeoc-releases-annual-performance-report-fiscal-year-2022.

Fenton, M.K. (2022). Employment Discrimination Statistics in 2022. [online] Wenzel Fenton Cabassa, P.A. Available at: https://www.wenzelfenton.com/blog/2022/07/18/employment-discrimination-statistics-employees-need-to-know/.

Hamilton College. (n.d.). Having a ‘Difficult-to-Pronounce’ Name Can Impact Career, Says Hamilton Expert. [online] Available at: https://www.hamilton.edu/news/story/name-pronunciation-research-stephen-wu [Accessed 29 Jan. 2024].

Siddique, H. (2019). Minority ethnic Britons face ‘shocking’ job discrimination. [online] the Guardian. Available at: https://www.theguardian.com/world/2019/jan/17/minority-ethnic-britons-face-shocking-job-discrimination.

Anderson, S. (2022). IMMIGRANT ENTREPRENEURS AND U.S. BILLION – DOLLAR COMPANIES. [online] NFAP. NATIONAL FOUNDATION FOR AMERICAN POLICY. Available at: https://nfap.com/wp-content/uploads/2022/07/2022-BILLION-DOLLAR-STARTUPS.NFAP-Policy-Brief.2022.pdf.

About | My name is Sohrab Vazir. I’m a UK-based entrepreneur and business consultant. At the age of 22, and while I was an international student (graduate), I started my own Property Technology (PropTech) business, StudyFlats. I did so by obtaining an endorsement from Newcastle University under the Tier 1 Graduate Entrepreneur Scheme. Subsequently, I obtained a further 3-year Tier 1 Entrepreneur Visa (replaced by the Innovator Founder Visa). I grew my business to over 30 UK cities, and a team of four, and also obtained my Indefinite Leave to Remain (Settlement) in the UK. I now help other migrant entrepreneurs, such as myself, with their businesses.