IMMIGRATION AND ENTREPRENEURSHIP
Whilst it has tended to have been seen in a positive light in the USA with an increasing recognition that immigrants can bring considerable economic benefits, this contrasts with some recent attitudes within the UK where the influx of foreign workers has caused considerable worry in relation to the perceived impact on employment and the earnings levels of the existing UK population.
In particular, there was recent trepidation by some politicians that, with the citizens of both Bulgaria and Romania gaining the same rights to work in the UK as other EU citizens on January 1st 2014, there would be a flood of immigrants from both countries. However, this has not yet happened and there are increasing doubts as to whether those large numbers of incoming immigrants will actually materialise.
To date, much of the analysis on immigrants in the workplace has focused on their role within the mainstream labour market and the worry that they are taking jobs away from UK citizens. However, there has been very little attempt to examine whether these immigrants from Central and Eastern Europe can add real value to the entrepreneurial vitality of this nation by starting their own businesses rather than being employed for someone else and taking jobs from UK workers.
This is despite the fact that immigrants are relatively more likely to be self-employed than the native population and that the value of entrepreneurial activities of immigrants may be considerable within advanced economies, especially in relation to the technology businesses they create. For example, research has shown that non-Americans have started over half of the businesses that have been established in Silicon Valley, one of the most successful and innovative regions in the World.
I have recently been working with other academic colleagues to examine the potential impact of immigrant entrepreneurs from the so-called accession countries, including the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, on the UK economy.
The results are surprising and, to be honest, are different to what we initially expected. First of all, we found that those individuals from accession countries were more likely to see entrepreneurship as a positive career choice and the entrepreneurial intention to start a new business was higher in most accession countries than for those in the European Union.
This suggests an expectation of higher levels of new business starts by such immigrants when they arrived in the UK. However, our detailed analysis showed that was not the case. In fact, there is no real difference between the rate of entrepreneurial activity of accession country immigrants and those born and living in the UK, despite the former having a stronger preference for business ownership.
So why has a positive perception of entrepreneurship by accession country immigrants within their own countries not resulted in higher levels of entrepreneurial activity when they arrive in the UK?
First of all, research has indicated that most immigrants from accession countries, regardless of their entrepreneurial abilities, are in the UK to undertake short-term jobs and to then send back money back to their families in their home countries. This suggests that they have not deliberately set out to establish themselves within their adopted country and are more likely to be in safer jobs working for someone else than undertaking riskier opportunities through self-employment where steady income is less certain.
The lower than expected level of start-ups by immigrants may also be related to a lack of capital amongst new arrivals, which may be a contributing factor in the failure to convert entrepreneurial intention into actual activity. Given that few of those arriving from Central and Eastern Europe will have any track record with existing financial institutions in the UK, their failure to access capital is not surprising.
Entrepreneurial immigrants could, like many UK citizens, leave their jobs to set up their own business once they have established themselves in this country. However, it has been suggested that the experience gained in the UK mainstream labour market may not be providing immigrants with the required knowledge of sectors that are appropriate for start-up activities particularly as they are usually found to be employed in low paid sectors, such as food processing, hotel and restaurants and cleaning, where there are few opportunities for self-employment.
Finally, there a suggestion from some policy research that immigrants who want to set up their own firms tend to be excluded from any support provided by governments. As a result, a potentially important supply of new entrepreneurs may not have been encouraged sufficiently to its fulfil its potential.
Therefore, is the UK missing a real trick here in boosting entrepreneurial activity from those immigrants from Central and Eastern Europe that clearly have the ability and desire to do so but are facing real barriers in starting a business?
Certainly, the political focus has been largely on keeping out immigrant workers rather than welcoming immigrant entrepreneurs. And whilst one can understand the concerns over immigration at a time of high unemployment, few would argue with the premise that our economy can only benefit from having more entrepreneurs running their own businesses, regardless of where they come from.
Given this, it shouldn’t be beyond the ability of politicians and policymakers to make greater efforts to take advantage of the massive entrepreneurial potential of many of the immigrants arriving from Central and Eastern Europe and help them to establish real businesses that can create jobs and prosperity within their adopted country.