Immigrants Are More Likely to Become Successful Entrepreneurs & Business Owners

Interestingly, research shows that immigrants are more likely to become successful entrepreneurs than native-born Americans.

  • According to a new study released last week by Duke University and UC-Berkley, immigrant entrepreneurs founded 25.3 percent of all U.S. engineering and technology companies established in the past decade. This is very significant, since immigrants make up only 11.9 percent of the entire U.S. population.
  • In every 10-year census from 1880 to 2000, the percentage of immigrants who are self-employed is higher than the percentage of natives who are self-employed.
  • According to the 2000 U.S. Census, immigrant women were more likely to be business owners when compared to native-born women. Census data shows that 8.3 percent of employed immigrant women were business owners, compared to 6.2 percent of employed native-born women.

This leads me to wonder why immigrants are more likely to become successful entrepreneurs. What characteristics do foreign-born immigrants possess that most native Americans are lacking? Why is there such a high rate of entrepreneurship among immigrants?

Characteristics of Entrepreneurs

A research study, conducted in 1994, analyzed more than 50 studies conducted on the personality traits of successful entrepreneurs. This study found a consensus around six general characteristics of entrepreneurs:

  • tolerance of risk, ambiguity and uncertainty
  • commitment and determination
  • creativity, self-reliance and ability to adapt
  • leadership
  • opportunity obsession
  • motivation to excel

Other research on entrepreneurship has linked various demographic and cultural attributes to a higher likelihood of business success. These characteristics include:

  • Being an offspring of self-employed parents.
  • Being fired from more than one job.
  • Being an immigrant or a child of immigrants.
  • Previous employment in a firm with more than 100 people.
  • Being the oldest child in the family.
  • Being a college graduate.

In my opinion, immigrants have many of the same character traits as entrepreneurs. This may make them predisposed to succeed at a higher rate in the area of self-employment and entrepreneurship. I think the three biggest factors that link immigrants to entrepreneurship are: (1) risk-tolerance, (2) having the ability to adapt to changing and unfamiliar situations, and (3) motivation to excel combined with lots of hard work.

Tolerance of Risk, Ambiguity & Uncertainty

Immigrants are—by and large—a group of people who have shown (by the mere act of immigrating) that they are willing and capable of taking risks to improve their lives. Compared to the risks associated with immigration, the risks of entrepreneurship are small.

Although there are American-born people with this “can-do” attitude, they’re a small percentage of the population, just like immigrants are a small percentage of the population of their county of origin.

Ability to Adapt

The ability to adapt to changing circumstances and a foreign environment creates confidence in your abilities and skills. This is a huge advantage when starting a business. Many immigrants have no family or friends in the country they are immigrating to. Thus, self-reliance becomes critical.

Immigrants must overcome numerous challenges during the adaptation phase (language barrier, culture shock, outsider status, no family ties, possible discrimination, etc.). The ability to adapt to a foreign environment can be easily transferred to the business world. All of the immigrants I have met (so far) are exceptionally hard-working people. They work long hours, and are not afraid to get their hands dirty. Is it any wonder that they succeed financially?

Motivations for Entrepreneurship—Desire or Necessity?

I wonder whether some immigrants are forced into entrepreneurship out of necessity, rather than desire. Many lower-class immigrants do not have a college degree, and therefore do not “qualify” for white-collar, office work. Maybe some immigrants experience discrimination during the hiring process (due to accent, foreign mannerisms, etc.) and so, working for themselves becomes a necessity. This is simply speculation, but it could play a role.

Motivation to Achieve

I find it fascinating that research on entrepreneurship shows a higher rate of entrepreneurship among children of immigrants, than children of native-born Americans. I think children of native-born Americans are handed things too easily, which kills motivation, initiative and desire to achieve.

Children who are handed expensive cars, college educations, vacations, and new houses—all funded by mommy and daddy—rarely become first-generation millionaires or successful entrepreneurs. Why is this? Because life is too easy. What motivation do these children have to achieve? Too much has already been handed to them. They are not accustomed to overcoming obstacles.

Children of immigrants are “hungry” in a way that children of native-born Americans are not. This hunger for success drives the creation of new businesses, and the cultivation of skills necessary for financial success.


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