Immigrant Entrepreneurship and Its Growth Potential


Immigrant entrepreneurship has long been an important factor contributing to and shaped by the context of economic systems. Although it is known to have a significant impact on socioeconomic dynamics, there is a lack of information on the enablers and constraints associated with this phenomenon. In economics, entrepreneurship generally refers to an individual’s economic activities aimed at continuous income generation. Entrepreneurs often act in conditions of uncertainty, taking all the risks associated with certain economic activities, which have to be registered by the relevant authorities. There is currently no consensus on the definition of the concept of immigrant entrepreneurship, largely because the definitions of the term ‘immigrant’ also differ. This research will review the theories and other economic content on such aspects of immigrant entrepreneurship as motivation, competencies, and growth potential, analyzing the role of the entrepreneur and its importance in the contemporary economy.

Immigrant Entrepreneurship

Motivation is an important factor in immigrant entrepreneurship research since immigrants have traditionally been perceived as highly motivated entrepreneurs. Two main theories that have been used to analyze and explain these motives are the disadvantage theory and the cultural theory (Dabić et al., 2020). The disadvantage theory states that immigrants’ entrepreneurial efforts are motivated by necessity. Starting their own business in a new country is often the only way to become financially sustainable or more efficient than finding a job. In turn, cultural theories analyze different cultural characteristics of ethnic minorities that make them engage in creating a business.

Cultural background and specific cultural characteristics can also be discussed about entrepreneurial competencies. According to Malki et al., immigrants tend to search for fields with low entry barriers so that they can compete with other businesses using their skills (2020). In addition to general entrepreneurial competencies, such as “knowledge, motives, and self-efficacy”, studies on immigrant entrepreneurship include “acculturation and adaptation, language, or intercultural skills” as more specific competencies (Dabić et al., 2020, p. 29). One of the crucial factors that make representatives of ethnic minorities choose self-employment is the ability to speak the host country’s language.

Another factor that impacts immigrant entrepreneurship is the presence of ethnic networks in the host country. Existing ethnic networks have been viewed “as a kind of safety network” not only for “new migrants”, but for “all entrepreneurs who want to pave their way in the host country’s economy” (Dabić et al., 2020, p. 29). These networks provide several disadvantages, including financial and information resources, contacts, and necessary knowledge of market characteristics and customer service areas. In addition, capital constraints are mitigated in migration networks as investment opportunities, sales, and profits are increased.

Research on immigrant entrepreneurship also shows that many factors play a role in the entrepreneur’s choice of enterprise to create and expand and business strategies to use. One approach suggests that this choice is based on three factors. These include “the characteristics of an entrepreneur, opportunities connected with being a member of an ethnic group, and opportunities connected with functioning within a local community” (Dabić et al., 2020, p. 29). For example, the lack of connections within the local community can prevent immigrant entrepreneurs from expanding their businesses.

In turn, those enterprises that choose to grow to tend to use the strategies of diversification inside or outside of an ethnic group and internationalization. Apart from social factors, such as ethnic networks, the characteristics of the market and the opportunities available influence the growth potential of immigrant enterprises. This idea is mainly based on “the concept of mixed embeddedness”, according to which “immigrant entrepreneurs can create opportunities by questioning the rules or introduce innovations on a small, local scale (like Schumpeterian creative destructors)” (Dabić et al., 2020, p. 29). Internationalization seems to be a natural option for any successful immigrant entrepreneur, which can be explained by their intention to develop the business and create connections between their originating and host countries.

Immigrant entrepreneurship can also be analyzed using the classical Schumpeter’s theory, which states that an entrepreneur’s role is to bring innovation to the economy, break its traditional functioning, and establish new production and consumption processes. A common view holds that “immigrants are especially entrepreneurial” and that they have made significant contributions to the “economic growth, employment, and innovation” in different countries (Cato Institute, 2017). Studies have shown that entrepreneurial immigrants are more likely to create and own enterprises when compared to their native counterparts (Dabić et al., 2020). Qualified and skilled immigrants have promoted significant progress in the innovation and technology sectors, evident by the increase in patenting in science and engineering.


It can be concluded that immigrant entrepreneurship plays a major role in the contemporary economy. High-skilled entrepreneurial immigrants are more likely to establish a business in the host country and expand it, which promotes economic integration between states. Although there has been researching done on different aspects of immigrant entrepreneurship, it has mainly focused on the accomplishments and contributions of high-skilled entrepreneurs. Therefore, further research may benefit from considering the challenges and growth factors of this phenomenon.


Cato Institute. (2017). Immigrant entrepreneurship: Trends and contributions

Dabić, M., Vlačić, B., Paul, J., Dana, L., Sahasranamam, S., & Glinka, B. (2020). Immigrant entrepreneurship: A review and research agenda. Journal of Business Research, 113, 25-38.

Malki, B., Umans, T., & Pittino, D. (2020). The entrepreneurial financing for the immigrant entrepreneurs: A systematic literature review. Academy of Management Proceedings, 2020(1), 16929.

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