Migrants as Entrepreneurs

Why migrants often start businesses at high rates, what kinds of firms they build, and the barriers they face along the way.

Entrepreneurship is the act of starting and running a new business, taking on risk in the hope of profit. In many countries, migrants start businesses at notably high rates. Research in the United States, for example, has found that immigrants are more likely than native-born Americans to found new companies, from small shops to fast-growing technology firms. Understanding why helps explain one of the ways migration shapes an economy.

Why migrants start businesses

Part of the answer is self-selection: the people who choose to leave home and start over in a new country are, almost by definition, willing to take risks and adapt to uncertainty, which are also traits useful in business. Migrants may also spot opportunities that locals overlook, such as demand for foods, goods, or services familiar to their community, or trade links with their home country.

For others, starting a business is less a dream than a necessity. When foreign qualifications are not recognized, language is a barrier, or employers discriminate, self-employment can be one of the few available paths. Economists call this necessity entrepreneurship, as opposed to opportunity entrepreneurship. Both kinds are common among migrants, and both create jobs and income.

From corner shops to global companies

Migrant businesses range widely. Many are small family firms: restaurants, grocery stores, taxi services, and repair shops, often clustered in an ethnic enclave, a neighbourhood where many people from the same background live and work. These enclaves offer customers, workers, and informal support to newcomers.

At the other end of the scale, migrants have founded or co-founded many large companies. In the United States, studies have found that a substantial share of the most valuable start-ups had at least one immigrant founder. Indian-born entrepreneurs, in particular, have been prominent founders and leaders in the technology sector.

A family shop that grows

Imagine a couple who move to a new country and open a small grocery selling spices and foods from home. In the first year, they work long hours themselves and earn barely enough to cover rent. By year three, local customers of many backgrounds have discovered the shop, and they hire two employees. By year eight, they supply several restaurants and run a second store with six staff. A business that began because the couple could not find work in their trained professions now employs eight people and pays taxes, rent, and wages into the local economy.

Barriers migrant entrepreneurs face

Migrant business owners often face extra hurdles. Access to credit is a common one: banks may be reluctant to lend to someone with no local credit history, forcing entrepreneurs to rely on personal savings, family, or community lending circles. Navigating licences, tax rules, and regulations in a new language can be slow and costly. Visa rules can also matter; in some countries, people on certain temporary visas are not permitted to run their own businesses. Several countries, including Canada and the United Kingdom, have created start-up visas designed to attract entrepreneurs.

A balanced view

Not every migrant business succeeds, and high rates of self-employment can sometimes reflect exclusion from the regular job market rather than pure opportunity. Some migrant-run small firms also operate on thin margins with long hours. A balanced view recognizes both the real economic contribution of migrant entrepreneurs and the barriers that make their path harder.

Assuming all migrant businesses are small or all are start-up stars

Stories about migrants tend to focus either on corner shops or on billionaire tech founders. In reality, migrant entrepreneurship spans the whole range, and most firms fall somewhere in between. Judging the contribution by either extreme gives a distorted picture.

Key takeaways

Migrants in many countries start businesses at high rates.
Self-selection for risk-taking and spotting unmet demand both play a role.
Some migrant entrepreneurship is driven by necessity when other jobs are hard to get.
Migrant businesses range from enclave shops to major technology companies.
Access to credit, regulations, and visa rules are common barriers.