Lessons for U.S. Metro Areas: Characteristics and Clustering of High-Tech Immigrant Entrepreneurs

An open and culturally diverse environment helps promote high-tech entrepreneurship among both immigrants and the U.S.-born, according to a new research report released today by the Ewing Marion Kauffman Foundation.

Immigrant-owned businesses, 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 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.

Immigrants comprised 20 percent of the high-tech work force and 17.3 percent of high-tech entrepreneurs between 2007 and 2011, according to the study, which used the American Community Survey. This represents an increase of 13.7 percent and 13.5 percent, respectively, from 2000.

In addition, between 2000 and 2011, the number of self-employed immigrants in high-tech industries increased by 64 percent, compared with 22.6 percent for U.S.-born.

Immigrants’ impact on high-tech entrepreneurship varies according to country of origin, the study found.

Since the beginning of the new century, immigrants from Colombia, China, India, Korea and Vietnam expanded the number of the self-employed in high-tech industries. On the other hand, the number of high-tech entrepreneurs from Iran, England, Mexico, Germany and Cuba stagnated.

The paper’s authors, Cathy Yang Liu from Georgia State University, Gary Painter from the University of Southern California and Qingfang Wang from the University of North Carolina at Charlotte found that, compared to high-tech businesses owned by those who are U.S.-born, immigrant-owned high-tech businesses are more concentrated in industry categories such as semiconductor; other electronic components; magnetic and optical media; communications; audio/video equipment; and computer science-related sectors.

The paper also points out that immigrant high-tech entrepreneurs are concentrated in a smaller number of metropolitan areas. Eighty percent of immigrant high-tech entrepreneurs operate in the largest 25 metropolitan areas, compared with 57 percent of their U.S.-born counterparts.

The report lists the top 25 Metropolitan Statistical Areas by their share of high-tech entrepreneurs, immigrant and U.S. born. Not surprisingly, New York, Los Angeles and San Francisco metropolitan areas account for about a third of all immigrant high-tech entrepreneurs in the country in 2011.

However, metros registering substantial growth over the last decade include Atlanta, Chicago, Fort Lauderdale, Houston, Miami, Riverside and Washington, D.C. Interestingly, the metros of Silicon Valley – San Francisco and San Jose – did not experience substantial growth.