Immigration and high tech entrepreneurship

One of the things I have got in the habit of doing when I am in the USA is to buy a swathe of business magazines from the first newsstand I come across.

Last week, I managed to get my fix of Inc Magazine, Fast Company, Entrepreneur Magazine and a range of other periodicals. However, it was an article in Business Week on technology entrepreneurs that caught my eye.

The magazine had undertaken a study to examine the typical profile of the technology-made entrepreneur in the USA, surveying over 650 executive officers and heads of product development in 500 engineering and technology companies established from 1995 through 2005. The results were, if nothing else, surprising to read.

First of all, the age old myth of technology-based entrepreneurs being young students, sometimes dropouts, in their early 20s who start such companies as Google, Microsoft and Apple was shattered. Instead the study found that the average age of founders was 39, with twice as many being over 50 as were younger than 25.

Not surprisingly, whilst nearly all of the entrepreneurs were graduates, a third had Master’s degrees and ten per cent Ph.Ds. Interestingly, the founders graduated from a range of universities, although graduates from the Ivy League colleges (i.e. the leading US universities) were more likely to become entrepreneurs than others and run more successful firms. This shows the importance of our leading universities, such as Cardiff University, to encourage enterprise amongst its staff and students and not to believe that this should be limited only to the new university sector.

Another striking finding was the fact that a quarter of the technology companies studied had a foreign-born chief executive or lead technologist as a founder. More importantly, these immigrant run companies accounted for £26 billion in sales and 450,000 jobs in 2005. This supports previous findings by Anna Lee Saxenian which showed the importance of immigration to the recent growth of Silicon Valley.

In particular, Indians were the key driving force, founding more technology-based businesses in the last ten years than all the other immigrant groups combined.

The real contribution of these immigrants, though, is to be found in their intellectual contribution to the USA, with a quarter of U.S-originated international patent applications authored or co-authored by foreign nationals living in America, a three-fold increase on the 7.8 per cent recorded in 1988.

As the study says, there are real lessons in terms of how to encourage more technology-based entrepreneurs in an economy. As studies such as the GEM report have shown, education provides a competitive advantage in terms of entrepreneurship, with a higher proportion of those with postgraduate degrees starting their own business.

However, the Business Week survey suggests that many of those with better qualifications are also older and have spent a number of years working for someone else. This seems to suggest that the rate of high technology entrepreneurship can be increased if middle-aged scientists and technologists can be encouraged to start their own businesses.

A few years ago, there were a number of studies carried out on corporate venturing by the Welsh Development Agency but, unfortunately nothing emerged in terms of any programme to get more workers, especially those in high technology industries, to consider entrepreneurial activity.

Certainly, we should continue to encourage entrepreneurship amongst students and young people, but this should also be extended to educating our current workforce and there is certainly a role for our enterprise agencies to teach their current enterprise programmes in larger companies. There is a massive potential and plenty of great ideas amongst the existing workforce in Wales if only they can be nurtured and developed through enterprise training.

However, the findings on the links between immigration and entrepreneurship could possibly have the biggest impact on the Welsh economy if mechanisms can be put into place to attract the best global talent in science and technology to our universities, to encourage innovation and enterprise in that talent and to help it to establish businesses here in Wales.

If the Artes Mundi is the one of the largest art prizes in the World, then there is certainly no reason as to why the Assembly Government shouldn’t also take a massive leap of faith and say that we will pay the best bursaries possible to get the best scientists from all over the World here to Wales.

This, along with the presence of giants such as Sir Martin Evans at Cardiff University and the hundreds of world-class scientists within our universities, could make the difference to the future of the Welsh economy and, who knows, create a cluster of immigrant-run high technology firms which could make the same impact as those in the USA.

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