Editor’s note: Vivek Wadhwa is a fellow with the Labor and Worklife Program at Harvard Law School and executive in residence/adjunct professor at the Pratt School of Engineering at Duke University. He is a serial entrepreneur, including the founding of Cary-based Relativity Technologies. This article is reprinted with permission of BusinessWeek Online.
“With all the ‘myth-busting’ research I have been doing, I am sure that no one will be surprised to learn that I take a lot of fire from those that don’t like my findings,” I wrote in a note accompanying my latest BusinessWeek column. My reports on immigration have created the most controversy. In an academic listserv maintained by the Sloan Foundation, I had a couple of academics challenge me in every way they could.
Their first "volleys" were on methodology. There were no issues with this. Then the question I couldn’t respond to was, “What if these immigrants didn’t come here?” The argument was that Americans would have invented the same technologies or started similar companies instead – and that my research did not prove that immigrants were more entrepreneurial than natives.
Well, my current BusinessWeek article responds to this issue based on a new research report by the Small Business Administration/Rob Fairlie of UC-Santa Cruz.
I published a back in 2006 showing that over 50 percent of Silicon Valley engineering and technology startups were founded by immigrants (as were 25 percent of such startups nationwide), I concluded that immigrants were more likely to be entrepreneurs. Most of the feedback I received was extremely positive. But I also took fire from a few well-known opponents of open-immigration policy, including professor Norm Matloff of the University of California at Davis, who said that large existing immigrant populations in tech centers skewed the results of my survey of 2,054 companies.
Matloff has argued, in academic listservs and in a volley of e-mail exchanges with me, that all things being equal, immigrants are no more likely to start businesses than U.S. citizens and permanent residents. He says this is particularly true in Silicon Valley, because immigrants comprise about 50 percent of the population. Therefore, his argument goes, immigrants really only displace entrepreneurs who are U.S. citizens and permanent residents, rather than augment the total number of startups and add real economic value.
But I continued to believe the high immigrant population was reflective of higher-risk appetites required for environments like Silicon Valley, where joining a startup is always a risk. In other words, choosing to start a business is a process of self-selection, not a numbers game that happens because a lot of immigrants happen to live in one area. At a gut level, one would think that immigrating to a new country is risky and therefore new immigrants have a higher risk appetite than U.S.-born folks. Truly conclusive data, however, was difficult to put together due to limitations on sample sizes.
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