Immigrant Entrepreneurs

By: Dr. Kumar Gurung (Ph.D., MS., MCEC., LLB.)

Immigrants are the people who move to host countries (where they are not natives) to settle permanently, seeking economic opportunity, political refuge, and religious freedom (Awotoye & Singh, 2018; Bernstein et al, 2019; Ugarte et al, 2020). They are growing in the host countries, including the USA (Berg, 2015; Awotoye & Singh, 2018). Immigrant entrepreneurs (IE) are permanent residents or naturalized citizens who create or expand economic activity to explore new products, markets, or processes, thereby generating value
(Ahmad & Seymour, 2008)They could be replicative or innovative. Creative entrepreneurs engage in business activities related to a new product, service, or product creation strategy, or conveyance
(Griffiths et al, 2012; Igboamazu, 2016). According to Awotoye & Singh (2018); Pung et al. (2017), immigrant entrepreneurs have started businesses in the cities they have relocated to (Lilius & Hewidy, 2019); however, their firms are more likely to fade away, fail, or exit. The reasons for these are language barriers, a sense of loss, not feeling at home, and perceived discrimination.
etc., as measured by the DI scale (Brady et al., 2021).

The Demands of Immigration (DI) scale is comprised of six correlated, reliable, valid scales determined by Brady et al. (2021) addressing language barriers, sense of loss, not feeling at home,
perceived discrimination, novelty, and occupation (Pung et al., 2017). It impacts immigrant entrepreneurs’ intentions to engage in three specific entrepreneurial behaviors: venture formation,
growth, and abandonment (Awotoye & Singh, 2018). Vedula and Kim (2019) demonstrated that immigrant entrepreneurial ventures fail or fade away because of the entrepreneurial ecosystem’s lower quality.

Further, Malki et al. (2022) research also uncovers financial limitations as to the first worry for immigrants. All participants in his study agreed that financial constrain is a significant factor in
their business success. Immigrant entrepreneurs face difficulty acquiring start-up loans from the banks because they lack the banks’ requisite collateral (Khosa & Kalitanyi, 2015). They have to
work several jobs for start-up funds since they have no inherited wealth (Igboamazu, 2016; Malki et al., 2022). If this group of entrepreneurs does not form, grow, or instead fade away, fail, or
abandon firms, it will negatively impact the U.S. economy with the increase in the unemployment rate and the absenteeism of innovations (Kerr & Kerr, 2018; Jensen & Laurie, 2017). According to
Brzozowski (2016), the research primarily focuses on a small number of countries with few popular immigrant societies and is not studied noticeably from their entrepreneurial perspective.

If the problem persists, the firms created by immigrants will consequently have higher exit rates (Mata & Alves, 2018); due to the demands of immigration (Brady et al., 2021) and lack of a quality entrepreneurial ecosystem (Vedula & Kim, 2019). The entrepreneurial ecosystem is a structure of interconnected stakeholders, including customers, investors, mentors, suppliers, and employees (Cavallo et al., 2019). According to Welter (2011), it is economic, social, and cultural forces. It helps produce entrepreneurship in a geographic area, individuals, organizations, and institutions (Brown & Mason, 2017; Kuckertz, 2019; Spigel & Harrison, 2018). The entrepreneurial ecosystem often descriptive rather than theoretical (Roundy & Fayard, 2020) and does not emphasize the linkages between ecosystem forces and entrepreneurial activities (Stam & Spigel, 2016). The stress

and obstacles immigrant entrepreneurs face will reduce their intentions to grow their firms and increase their intentions to abandon (Awotoye & Singh, 2018).

The immigrants who arrived between 1987 and 1996 exceed natives in personal income and homeownership 41% vs. 37% (Kerwin, 2018). According to Vedula and Kim (2019), higher
quality of entrepreneurial ecosystems shelters entrepreneur ventures, while ventures in weaker ecosystems are more likely to fade away and fail. For serial entrepreneurs, ecosystem quality has a much smaller impact on venture survival (Vedula & Kim, 2019). Therefore, this research will consider whether the Quality Entrepreneurial Ecosystem (QEE) will contribute to overcoming the demands of immigration (DI), as stated by Vedula and Kim (2019). Qualitative research effectively addresses grand challenges and develops an insightful theory that explores the factors influencing entrepreneurial activities in the immigrant environment (Awotoye & Singh, 2018; Eisenhardt et al.,2016).

In many European countries, including the United States, immigrants have higher business ownership rates than native-born citizens (Fairlie & Lofstrom, 2015). According to Bernstein et al. (2019), the firms’ immigrants establish value to the U.S. through tax revenue, innovation, and employment creation (Jensen & Laurie, 2017). Elon Musk, Steeve Jobs, Sergey Brin, Arianna Huffington, and Peter Thiel are well-known, successful immigrant entrepreneurs in the U.S. (Bernstein et al., 2019). A growing academic literature confirms that high-skilled immigrants
provide long-lasting benefits to the U.S. economy (Jensen & Laurie, 2017) through entrepreneurship, job creation, and innovation (Bernstein et al., 2019).

Recent research using data from the Survey of Small Business Owners found that the first- generation immigrants created about 25% of firms in the U.S. (Pekkala & Kerr, 2020) and founded
90 U.S listed enterprises on Fortune 500 (Brzozowski, 2016). The second-generation immigrants who have at least one foreign-born parent is over 40 million in the USA, and they are also
anticipated to impact the U.S. economy if the host country extends solidarity (Ugarte Gurrutxaga et al., 2020; Sanderson et al., 2021; Grigorieff et al., 2020). In states with more significant immigrant populations like New York, New Jersey, and California, the first-generation immigrants created more than 40% of the firm (Kerr & Kerr, 2018). According to 2006-2010 estimates, the American Community Survey found that 18.2% of business owners represent all U.S. business types (Fairlie & Lofstrom, 2015). Further, they accounted for 16.3% of the total U.S. workforce, with four million employees working with second-generation immigrant firms (Kerr & Kerr, 2018). Therefore, to address immigrant entrepreneurs’ needs by finding an empirical support system is essential as they denote a significant percentage of growing entrepreneurs in the U.S. (Awotoye &
Singh, 2018).

Awotoye and Singh (2018) highlighted that immigrant found or remained in ventures irrespective of their stress level (Vandor & Franke, 2016; Kerr & Kerr, 2016) because they have a higher level
of resilience as compared to non-immigrants. Entrepreneurial resilience involves adaptation to the challenges resulting in liquidation, bankruptcy, or closure (Awotoye & Singh, 2018). Research has revealed that resilience is positively associated with continuous improvement in challenging times
(Chadwick & Raver, 2013), the health of entrepreneurs and their firms (Virginie & Olivier, 2012) and firm success (Fisher et al., 2016). Higher entrepreneurial resilience will lower intentions to
abandon the business (Awotoye & Singh, 2018); however, the entrepreneurs might have more

significant penalties if things do not improve as anticipated. Thus, a high-quality entrepreneurial ecosystem might be a solution for immigrant entrepreneurs (Vedula & Kim, 2019).