Immigrants Help Propel Entrepreneurial Drive

Immigrants were at the heart of one-quarter of the nation's tech and engineering startups over a turbulent 10-year period. Among the tech companies established from 1995 to 2005--a time of explosive growth and challenging contraction--25.3 percent had at least one immigrant founder, a study by Duke University (Durham, N.C.) and the University of California-Berkeley finds. Duke graduate students in engineering management looked at 2,054 companies to come up with the numbers. The resulting report, America's New Immigrant Entrepreneurs, was co-published by the two universities and released last week. Their data confirms the expansion of a trend that began in the '90s in Silicon Valley, said AnnaLee Saxenian, dean of Berkeley's School of Information and an adviser to the study. "The consequence is that these immigrants are generating new jobs and wealth for the U.S. economy," she said. Immigrant-founded companies focus primarily on semiconductors, computers, communications and software, the study found. The least representation is in defense, aerospace and environmental tech and engineering. Immigrant founders are generally CEOs, chief technology officers or heads of development. And their companies make a sizable contribution to the U.S. economy, creating $52 billion in revenue and employing 450,000 workers in the period studied. California claims the largest percentage of immigrant tech company founders. Its 39 percent is followed by New Jersey at 38 percent, Georgia (30 percent) and Massachusetts (29). States with less representation include Texas at 18 percent, Ohio and North Carolina (14 percent) and Washington (11). "The geographic distribution of these immigrant tech firms is interesting and important," said Saxenian, "in particular the high rate of immigrant-founded businesses in California and New Jersey." The ethnic mix of immigrants founding companies varies by state, but Indians take first place nationally, accounting for 26 percent of companies with immigrant leaders overall. To put that in perspective, immigrants from Britain made up 7.1 percent of the total, those from China 6.9 percent and those from Taiwan 5.8 percent. Indian immigrants are 20 percent of California's tech and engineering company founders and 47 percent of New Jersey's. At 46 percent, software companies make up the largest chunk of companies founded by Indian immigrants. Another 44 percent are innovation/manufacturing-related companies, the study found. The research underscores the growing importance of Indian immigrants, said Daniel Griswold of the Cato Institute, a libertarian think tank in Washington, D.C. . It also provides a different take on the global economy in general and outsourcing in particular. "While all the focus has been on outsourcing to India, this shows how important the inflow of Indian human capital has been to the American economy," Griswold said. Certain immigrant groups favor certain states, the research found. Indian entrepreneurs, for example, are concentrated in California and New Jersey, British in California and Georgia, and Chinese and Taiwanese in California. The study also looked at California's Silicon Valley and Research Triangle Park in North Carolina to examine the role of regional centers in tech growth. More than half--52.4 percent--of Silicon Valley startups had one or more immigrants as a key founder, while California's average was 38.8 percent. In Research Triangle Park, 18.7 percent of startups had an immigrant founder, while the rest of the state averaged 13.9 percent. U.S. Census data from 2003 shows that 11.7 percent of the population was foreign-born. State immigration populations vary widely, though. At 24.9 percent, California has the highest percentage of immigrants, followed by New York, with 19.6 percent and Florida with 18.4 percent. Immigrants from India and China together make up only about 1 percent of the total U.S. population, the study said. The study was meant to examine the role of skilled--and legal--immigrants in developing the U.S. tech economy, said Vivek Wadhwa, who led the Duke research. In the debate over illegal immigration, he said, the government seems to ignore legal immigrants, who contribute significantly to the economy. A tech entrepreneur and a native of India, Wadhwa also is executive-in-residence at Duke's Pratt School of Engineering. The key to maintaining U.S. global economic competitiveness is to use its strengths, and skilled immigrants are one of those strengths, Wadhwa says. "To maintain our competitiveness, we need to attract the best and brightest from all over the world," Wadhwa said. "We want these people . . . on our side rather than competing with us." Advocates of increasing the quota for skilled temporary foreign workers say the research supports their position, though. Skilled immigrants add value to the economy, said Washington, D.C., attorney Marcy Stras, head of the business immigration practice at the law firm Baker Hostetler. "I'm very happy that there's something the government can take note of that positively proves that," Stras said. The main H-1B quota is set at 65,000 visa yearly, which usually go to foreign workers with at least a bachelor's degree coming to the States to take a job that demands at least that level of education. Another 20,000 foreign workers with a master's degree or higher from a U.S. academic institution also qualify for visas.     See related chart