Immigrants and Entrepreneurship

The Kauffman Foundation is an organization in Kansas City, Missouri, that promotes entrepreneurship. Its Index of Entrepreneurial Activity measures business startup activity for the entire U.S. adult population at the individual owner level.

According to its study, the rate of entrepreneurial activity for native-born Americans was 0.28% in 2005. The rate for immigrants was somewhat higher, at 0.35%.

Why are immigrants more likely to start up their own businesses? Michael Mandel, chief economist of BusinessWeek, provides an explanation:

The conventional explanation is that immigrants, by nature, are greater risk-takers and more energetic – or else they would have stayed in their home countries. And because they are not integrated into existing social networks, it’s easier for them to try something new.

(Source: What It Means to Hit 300 Million)

Some of the most famous immigrant entrepreneurs are Jerry Yang of Yahoo!, Sergey Brin of Google and Steve Chen of YouTube. Andy Grove was the third employee of Intel.

Closer to home, immigrants might have shaped the economy of Malaysia. Chinese migrated to Malaysia in the 19^th century and first half of 20^th century, with the single purpose of making money. Many of them worked as coolies in tin mines, but went on to start up their businesses. Though being minority in their host country, ethnic Chinese dominated business sector until 1970s.

Of course, Malaysian government will never acknowledge the Immigrant Factor, and instead blame the former colonizer, Britain, for the income disparity across ethnic groups. Ethnic Chinese, on the other hand, are already well into third or fourth generation. A big question is: have they inherited the entrepreneurial spirit of their forefathers???