The Immigrant Entrepreneurship Landscape
Immigration and entrepreneurship has deeply impacted America’s economic dominance since the 19th century, with the U.S. developing a strong entrepreneurship culture as it became a country of immigrants. Since then, immigrants have continued to be over-represented among the self-employed, as documented in every economic census since 1880. Immigrants have an entrepreneurship rate of 0.52% with 520 entrepreneurs for every 100,000 immigrants compared to 0.26% for native-born Americans. Forty-three percent of Fortune 500 companies were founded by first- or second-generation immigrants, and 28 percent of Main Street businesses (non-chain, brick-and-mortar stores located on a main thoroughfare in a city) were founded by immigrants.
Research has found that immigrants act more as “job creators” than “job takers” and play an outsized role in high-growth entrepreneurship. They are more likely to hire employees, even in times of financial hardship. Some research suggests that immigrants are more likely to become entrepreneurs because of personality-based self-selection: those who emigrate willingly are more likely to have a higher level of risk tolerance, which is also necessary when starting a company. However, a more negative consideration, that immigrants are more likely to face discrimination in the workplace, often means that creating jobs for themselves is the most stable option. Immigrants may also replicate successful business models from their home countries and bring them to the United States.
Immigrant entrepreneurs are a key part of regional economies, in both major cities and small towns, although cities are especially attractive to immigrants. Data shows that immigrants are more likely to settle in central, larger, fiscally better-off cities that have high labor force participation and lower median incomes. Diverse, liberal, and educated populations are also more likely to welcome immigrants. Some cities have launched initiatives to attract immigrant entrepreneurs as part of their civic revitalization strategies or incorporated them into their overall economic development strategy. One such city is Chicago, whose entrepreneurship landscape we explore more closely in the next section.
Case Study: Chicago, Illinois
Chicago’s business landscape presents fertile ground for entrepreneurs and potential small business owners. The city has the most diversified economy in the United States, is ranked the top tech ecosystem in the Midwest, and became a “top three startup city” in 2021, with 12 venture capital firms crossing the nine-figure-fund threshold in the course of the year. The city offers access to startups, incubators, accelerators, and a diverse talent pool. Immigrant entrepreneurs are a crucial part of the thriving entrepreneurship ecosystem in Chicago. Nearly 24% of employer-firm owners in the city are foreign-born, even though 20.6% of the general Chicago population was born abroad. This high figure can be attributed to Chicago being an “established immigrant gateway city,” with its large foreign-born population and higher institutional and financial capacities to assist them. For example, Little Village, a largely Mexican neighborhood, is home to the second highest-grossing shopping street in Chicago: 26th Street. The neighborhood’s contribution to the city economy highlights the importance of immigrants and immigrant entrepreneurs to the local economy.
Immigrant entrepreneurs have been a cornerstone of the city’s plans for economic growth for nearly a decade: in December 2012, then-Mayor of Chicago Rahm Emanuel released the Chicago New Americans Plan, which detailed plans to make Chicago the most immigrant-friendly city in the world and recognized that immigrants are crucial drivers of the Chicago economy. Part of the plan focused on proactively spurring immigrant entrepreneurship to drive Chicago’s lagging rate of overall entrepreneurship compared to other major cities.
Though the plan was well-received, its implementation was uneven. As the inaugural plan for the Chicago Office of New Americans, it laid a foundation for the city’s approach to immigrant communities, cementing it as a welcoming city and serving as a stepping stone for the development of the office. The plan also led to the development of the New Americans Small Business Series, a series of quarterly events that promote small business growth in Chicago’s immigrant communities by setting up temporary one-stop-shops in community settings that provide technical advice on the intricacies of establishing a small business. The program is now housed within the Department of Business Affairs and Consumer Protection (BACP). However, the Office of New Americans’ initial focus on helping immigrant business owners shifted after the election of former President Donald Trump, with the office’s priorities becoming more protective and defensive in response to concerns from immigrant communities in Chicago. This highlights a critical issue for cities and localities: their need to be responsive to the needs of the community as federal policy changes often impact the consistency of city programming.
The city and civil society groups have also worked together to develop programs to serve minority entrepreneurs, including immigrant entrepreneurs. The city’s Welcoming Ordinance means that any program is available to everyone, regardless of immigration status, allowing immigrant entrepreneurs to apply to programs like the Neighborhood Opportunity Fund and BACP programs like the Restaurant Start-Up Program. The city also offers seminars and materials in multiple languages, making opportunities more accessible to potential business owners who might speak a different language. Start-up guides from the BACP are available in English, Chinese, Korean, Polish, and Spanish—key languages for immigrant groups in Chicago. The Illinois Hispanic Chamber of Commerce and the Little Village Chamber of Commerce have been particularly active partners to the city in supporting immigrant entrepreneurship, with the latter group spearheading the development of Xquina Café. The café is a business incubator that aims to provide adaptable and culturally relevant programming and coaching to businesses in the Little Village neighborhood.
Chicago offers a welcoming atmosphere, with helpful and accessible resources for immigrant entrepreneurs. Nevertheless, challenges persist. The lack of data and evaluation of the city’s immigrant programs makes it difficult to determine how effective they are at increasing immigrant entrepreneurship in the city, lowering barriers for immigrant entrepreneurs, or increasing access to resources. This problem is not limited to Chicago—there is an overall lack of data when it comes to immigrant entrepreneurship. Shifting priorities from city administration to city administration, and changes in priority based on changes in federal administration, also makes it difficult to track programs with a longer life cycle.
Immigrant entrepreneurs also face generalized barriers in the field of entrepreneurship. Discrimination against immigrants can make it difficult for immigrants to start their own businesses, leading to hurdles when it comes to employment rates, revenues, and sales. Financing also often presents a barrier. Immigrants often have limited access to resources, language barriers, and a lack of knowledge of the market. Increasing research into immigrant entrepreneurship, collecting data on programs that are implemented to boost immigrant entrepreneurship and conducting evaluations, and lowering barriers at local and federal levels are all crucial to growing the success of immigrant entrepreneurs.
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