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First-Generation Immigrants Drive U.S. Immigrant Entrepreneurship According To Babson & Baruch Researchers

Wealthier and more educated, first-generation immigrants start and run new businesses at twice the rate of the second-generation.

As Congress engages in overhauling the country’s immigration system, new research finds that wealthier and more educated, first-generation immigrants drive U.S. immigrant entrepreneurship, starting and running new businesses at twice the rate of the second-generation. The 2012 Global Entrepreneurship Monitor (GEM) U.S. Report surveying immigrant entrepreneurs was recently issued by Babson College and Baruch College.

GEM researchers also found that first-generation immigrants outshone non-immigrants in recognizing good opportunities (48 percent vs. 43 percent); are more affluent (63 percent vs. 50 percent in top 1/3 income category); and are highly educated (57 percent vs. 45 percent holding bachelor degrees or higher). More than 16 percent of first-generation immigrants started and ran new businesses compared to 13 percent of non-immigrants.

“The first generation comes to the U.S. with a venturesome spirit and a new outlook,” said GEM Report’s lead author, Donna J. Kelley, Associate Professor of Entrepreneurship at Babson College. “They see more opportunities, perhaps because they view their surroundings with a different frame of reference than those who have been in the U.S. for a long time. They are wealthy and well-educated suggesting that they have the resources--both knowledge and financial--to start businesses.”

Report’s Key Findings about Immigrant Entrepreneurs:

• There is twice the proportion of entrepreneurs among first-generation immigrants (16.4 percent) than in the second generation (8.9 percent). Nascent activity is even more pronounced with 11 percent of first-generation immigrants starting businesses compared to 5 percent of second-generation immigrant entrepreneurs. Intentions to start a business are also higher (27 percent vs.17 percent).

• First-generation immigrants display a bolder entrepreneurial spirit than the second-generation, perceiving lots of opportunities for starting businesses in the U.S. (48 percent vs. 44 percent second-generation, 43 percent non-immigrants).

• Second-generation immigrants show higher fear of failure and greater risk aversion attitudes. They may be motivated to seek a more stable career path and are less confident in their abilities to run a business than both first-generation and non-immigrant entrepreneurs.

• Even so, fewer first-generation immigrants run established businesses (5 percent) compared to non-immigrants (9 percent) and second-generation immigrants (7 percent).

• The kinds of industries immigrants go into are distinctive with first-generation entrepreneurs choosing consumer ventures while the majority of second-generation entrepreneurs focus on business services.

• There are fewer female to male immigrant entrepreneurs (6-10 ratios) compared to non-immigrants (7-10). The decline in the entrepreneurship rate from first-to-second-generation immigrants suggests the acculturation of second-generation immigrants into the mainstream population, with the effect magnified to some extent among men.

• 57 percent of first-generation entrepreneurs hold bachelor degrees or higher, compared to 45 percent of non-immigrant entrepreneurs and 32 percent of second- generation immigrants.

• 63 percent of first-generation immigrant entrepreneurs - compared to just 50 percent non-immigrants - are in the upper 33 percent income level in the U.S.


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About GEM

Twitter: @GEMNOW

The Global Entrepreneurship Monitor (GEM) is a not-for-profit academic research consortium that has as its goal making high quality information on global entrepreneurship activity readily available to as wide an audience as possible. GEM is the largest single study of entrepreneurial activity in the world. Initiated in 1999 with 10 countries, GEM 2012 conducted research in 69 economies all over the world. Visit http://www.gemconsortium.org/.

About Babson College

Twitter:@Babson

Further reading:  "Entrepreneur-Friendly Immigration Reform"

Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds™. The College is a dynamic living and learning laboratory, where students, faculty, and staff work together to address the real-world problems of business and society -- while at the same time evolving our methods and advancing our programs. We shape the leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to create economic and social value. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought and Action® as the most positive force on the planet for generating sustainable economic and social value. For information, visit www.babson.edu.

By Barbara Spies Blair, 781-239-4621; blairb@babson.edu | 6/24/2013 9:42 AM