Immigrant Entrepreneurship: Does the Liability of Foreignness Matter?

Nahikari Irastorza, Inaki Pena

Abstract


The liability of foreignness is a phenomenon scarcely studied in the entrepreneurship literature. While immigrants seem to be prone to create new firms, they face different sorts of barriers to launch new businesses. We apply a binomial logistic regression on Global Entrepreneurship Monitor data to compare immigrants’ and natives’ entrepreneurial intentions to the actual self-employment activity of each group, and the factors affecting potential differences. We found that immigrants are more likely to have self-employment plans than natives but less likely to end up becoming self-employed. We explain this gap by the liability of foreignness hypothesis, i.e. additional difficulties faced by immigrants when entering the job market or starting up a business in a new country such as poor language skills, the lack of labour experience, the lack of human and social capital endowments specific to that country, and institutional restrictions including discrimination.


Full Text: PDF DOI: 10.5430/bmr.v3n1p1

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Business and Management Research
ISSN 1927-6001 (Print)   ISSN 1927-601X (Online)

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