High-Tech Immigrant Entrepreneurs prefer culturally diverse environments

New research from the Kauffman Foundation, demonstrates that an open and culturally diverse environment helps promote high-tech entrepreneurship among both immigrants and the second generation. Immigrant-owned start ups, the study shows, are more likely to locate in ethnically diverse metro areas that have high foreign-born populations. That’s important for metro areas hoping to attract and retain this fast-growing pool of high-impact founders. The research confirms what we have already suspected, since I would argue that this is not solely an american phenomena. London for example also fits this criteria. London suffers from the awkward question revolving around attracting higher ethnic diversity on a regular basis. This topic always gets sensitive when elections are around the corner, but a great city cant simply be filled with one demographic in this day and age, especially if it want to be a  High-Tech hub of innovation.

Immigrant High-Tech Entrepreneurs by MSA, 2011

The study, “Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant Entrepreneurs,” also reports that regional labor markets with greater percentages of high-tech industries and greater numbers of college graduates and patents – all indicators of innovation – tend to attract other high-tech companies. “Because immigrants are far more likely to start businesses – particularly high-tech companies – than are the native-born, their importance in the U.S. economy is increasing,” said Dane Stangler, vice president of Research & Policy at the Kauffman Foundation. “As America seeks to grow more high-tech businesses, this research provides strategies and policy implications for cities and states that want to attract highly skilled immigrant entrepreneurs.”

Figure 2. Immigrant High-Tech Entrepreneur Growth by MSA, 2000–2011

Key Takeaways include:

  • Among the top ten countries from which immigrants in high-tech industrieshave arrived to the United States, there is a significant variation in rate of self-employment and its growth over time. In period 2007–2011, the national rate of self-employment in high-tech industries is 6.2 percent. The rate is around 2 percent to 3 percent for immigrants from Vietnam, Mexico, and Philippines, and 9 percent to10 percent for immigrants from England, Iran, and Canada.
  • Since the beginning of the new century, the total number of the self- employed labor force in high-tech industries experienced significant growth in immigrants from Columbia, China, India, Korea, and Vietnam, but stagnant growth for countries like Iran, England, Mexico, Germany, and Cuba.
  • Compared to their U.S.-born counterparts, who are more evenly distributed across all the high-tech sectors, immigrant owned high-tech businesses are more concentrated in a limited number of industries, such as semiconductor, other electronic component, magnetic, and optical media, communications, audio/video equipment, and computer science- related sectors.
  • Spatially, immigrant high-tech entrepreneurs are concentrated in a smaller number of metropolitan areas, with 80 percent of them concentrated in the largest twenty-five metropolitan areas, in contrast to 57 percent of their U.S.-born counterparts.

Metropolitan hubs that also want to function as Hi-tech centers, must do all they can to attract higher ethnic diversity and a larger share of the foreign-born population since these are crucial factors in attracting or fostering immigrant high- tech entrepreneurship on the metropolitan level.  This thinking is a political hot potato, often manipulated by politicians for appeasement. But the fact are the facts. Findings from the study also suggest that a historic base of high-tech industries and innovation capacity in terms of college graduates and patents is conducive to innovation and high-tech entrepreneurship.