Immigrant Entrepreneurship: The Effect of Early Career Immigration Constraints on New Venture Formation

Rajshree Agarwal (), Martin Ganco () and Joseph Raffiee ()
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Rajshree Agarwal: Department of Management and Organizations, Smith School of Business, University of Maryland, College Park, Maryland 20742
Martin Ganco: Department of Management and Human Resources, Wisconsin School of Business, University of Wisconsin-Madison, Madison, Wisconsin 53706
Joseph Raffiee: Department of Management and Organization, Marshall School of Business, University of Southern California, Los Angeles, California 90089

Organization Science, 2022, vol. 33, issue 4, 1372-1395

Abstract: We examine how institutional factors may affect microlevel career decisions by individuals to create new firms by impacting their ability to exercise entrepreneurial preferences, their accumulation of human capital, and the opportunity costs associated with new venture formation. We focus on an important institutional factor—immigration-related work constraints—given that technologically intensive firms in the United States not only draw upon immigrants as knowledge workers but also because such firms are disproportionately founded by immigrants. We examine the implications of these constraints using the National Science Foundation’s Scientists and Engineers Statistical Data System, which tracks the careers of science and engineering graduates from U.S. universities. Relative to natives, we theorize and show that immigration-related work constraints in the United States suppress entrepreneurship as an early career choice of immigrants by restricting labor market options to paid employment jobs in organizational contexts tightly matched with the immigrant’s educational training (job-education match). Work experience in paid employment job-education match is associated with the accumulation of specialized human capital and increased opportunity costs associated with new venture formation. Consistent with immigration-related work constraints inhibiting individuals with entrepreneurial preferences from engaging in entrepreneurship, we show that when the immigration-related work constraints are released, immigrants in job-education match are more likely than comparable natives to found incorporated employer firms. Incorporated employer firms can both leverage specialized human capital and provide the expected returns needed to justify the increased opportunity costs associated with entrepreneurial entry. We discuss our study’s contributions to theory and practice.

Keywords: immigrant entrepreneurship; mobility; mobility constraints; job-education match (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:33:y:2022:i:4:p:1372-1395

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