Published on February 16th, 2016 | by Inès Briard | Credit: Katrin Marchand0
New European shows a sense of belonging to Europe, which also implies a willingness to contribute to European society.
Katrin Marchand is currently a PhD fellow at the United Nations University-MERIT and Maastricht Graduate School of Governance. Her dissertation is on the topic of migration and entrepreneurship, more specifically in the country of origin, but also on immigrant entrepreneurs.
Holding a bachelor in economics, Katrin started to be interested by the impact of migration on labour markets during her master thesis on migration in EU enlargement context. This sparked my interest to look further into issues of labour migration and especially migrant entrepreneurship, as migrants were often portrayed to be more entrepreneurial than natives.
Both migration and entrepreneurship are risky activities, thus, they might reflect risk seeker attitudes. Moreover, immigrants may see different kind of market opportunities that natives do not recognize. However, naturally not every migrant is an entrepreneur since there is a need for additional skills, this is why it is interesting to better understand what makes (successful) migrant entrepreneurs.
In general, challenges for immigrant and native entrepreneurs are similar, with in the top positions: difficult access to credit and long administrative procedures. However, there is evidence that immigrants often face even more problems when trying to secure the financial capital needed to start a business and that language is a barrier in the administrative tasks.
For many new Europeans, business ownership is a way to escape discrimination in the labour market of the destination country. Actually, migrants might face obstacles in terms of integration into their new society. Entrepreneurship provides a way of overcoming many of these challenges and at the same time contribute positively to the labour market if the business venture is successful.
The European Union faces a so-called European (innovation) paradox: a failure for EU countries to translate advanced scientific research in significant innovations. Entrepreneurs are part of the solution since they contribute to the development of new innovations and directly impact economic growth. As already mentioned, immigrants have a different perspective than natives with new ideas, skills and innovations which can benefit the society and economy they settled in.
The impact of migrant entrepreneurs is observed in high-tech firms, which often create employment opportunities, in addition to financial gains and innovations. Actually, immigrants have been found to be over-represented among founders of high-tech and biotech firms, at least in the United States where more studies have been conducted. Concrete examples of successful high-tech start-ups founded by migrants are Apple, Google, eBay…
Similarly, immigrant entrepreneurs have been found to be relatively over-represented among patent applications depending on the context and diversity in the business environment. Thus, in a suitable environment, migrant entrepreneurs might be one piece of the overall puzzle to solve European challenges in these areas.
Immigrants have socio-economic impacts on the host country but also on their country of origin. However, it is difficult to give a general picture of the economic benefits due to various countries and migration contexts. Indeed, the business environment and the overall labour market conditions in the country of origin largely influence the likelihood of returnees to become an entrepreneur and start a business. It has been shown that when the process is rather complex and there are sufficient opportunities for wage labour, it is unlikely that return migrants are more entrepreneurial than natives.
On the other hand, where there is a productive environment and maybe even a specific incentive, such as a tax break, for migrants to invest in a business in their country of origin, this foster higher rates of entrepreneurship among returnees than locals. In these particular cases, skills, knowledge and capital accumulated abroad positively influence their success rate and, therefore, their contributions to home countries’ economy and society.
One of the problems researchers faced is the lack of accurate and detailed data. The data available does not deliver a very clear representation of immigrants in the EU. It is very difficult to have a precise picture of who they are, what they are doing and how they are contributing to the societies they live in.
Moreover, data are often not harmonized across EU countries, which makes comparative analysis challenging and almost impossible. Looking specifically at SMEs, there is mainly superficial data on businesses started by natives versus immigrants leaving many open questions that unfortunately can currently not be answered.
I think to conclude it is important to mention that there is evidence that New Europeans contribute to economic development and innovation in both the country of destination and origin through entrepreneurial activities. Indeed, a critical review co-authored by Katrin demonstrated that migrants are net contributors to the general development of the country, thus removing discriminatory barriers in labour, consumer and financial markets will promote economic growth both in the country of origin and destination.This is also increasingly reflected in immigration policies, e.g. the development of specific visas, and return programs, e.g. entrepreneurship training for returnees, which aim to attract potential migrant entrepreneurs. And while both research and policy efforts in the field are increasing, there is still a lot to be done.
The key here is to understand migrant entrepreneurship better through research in order to be able to develop effective support mechanisms and partnerships to foster it further and maximize the potential positive contributions whether it is in the country of destination and origin.