Education, Entrepreneurship and Immigration: America's New Immigrant Entrepreneurs, Part II

Abstract

Skilled immigrants have achieved great success in starting engineering and technology companies in the United States, and they contribute significantly to the country's economic growth over time. The purpose of this study was to understand in greater detail the educational backgrounds and career trajectories of these immigrant entrepreneurs, as well as to identify lessons for enhancing the competitiveness of the U.S. economy. Census data show that the immigrants who are most likely to start engineering and technology businesses - from India, the UK, China, Taiwan, Japan, and Germany - are better educated than their native-born counterparts. Our research shows that these company founders are also better-educated than the norm in their respective immigrant groups. In fact, 96 percent of all immigrant entrepreneurs involved in engineering and technology in our study have completed a bachelor's degree, and 74 percent hold master's or PhD degrees. The great majority (75 percent) of their highest degrees are in science, technology, engineering, and mathematics-related fields. Immigrant founders were educated in a diverse set of universities in their home countries and across the United States. No single U.S. institution stands out as a source of immigrant founders. Similarly, those who received their undergraduate degrees in India or China graduated from a diverse assortment of institutions. Even the famed Indian Institutes of Technology educated only 15 percent of Indian company founders. More than half of the foreign-born founders of U.S. technology and engineering businesses initially came to the United States to study. Very few came with the sole purpose of starting a company. They typically founded companies after working and residing in America for an average of thirteen years. Immigrant entrepreneurs are concentrated in the nation's leading technology centers. The regions with the largest immigrant populations also tend to have the greatest number of technology startups. On average, 31 percent of the engineering and technology companies founded from 1995 to 2005 in the eleven technology centers that we surveyed had an immigrant as a key founder. This contrasts with the national average of 25.4 percent. Tech centers with a disproportionate percentage of immigrant startups relative to their state averages include Silicon Valley, with 52.4 percent (compared with a state average of 38.8 percent); New York City with 43.8 percent (vs. 26 percent); Seattle with 23.4 percent (vs. 11.3 percent); and Research Triangle Park with 18.7 percent (vs. 13.9 percent). Our research confirms that advanced education in science, technology, engineering, and mathematics is correlated with high rates of entrepreneurship and innovation. The U.S. economy depends upon these high rates of entrepreneurship and innovation to maintain its global edge.