Immigrant Entrepreneurship: The Joint Effect of Host and Home country Institutions

In this paper, we examine the joint effect of immigrant entrepreneurs’ human capital, their home country’s entrepreneurial culture and their host country’s sub-national institutional environment on their entrepreneurial success. Using a comprehensive dataset constructed from multiple sources for 2012 to 2017, we show that the effect of human capital on immigrant entrepreneurship is dependent on their institutional environment. We find that entrepreneurial culture at origin is highly significant and positively associated with the likelihood of starting an incorporated business across migrants. Mandatory E-Verify reporting has a positive and significant effect on immigrants’ decision to run an incorporated businesses but discourages immigrants from running unincorporated businesses. In showing persistent and lasting impact of institutional mind-maps from immigrants’ home environments, we provide a more nuanced understanding on the effect of human capital than that depicted in the prior entrepreneurial research. The results of this study inform immigration policy on how to augment the contributions of immigrant entrepreneurs and enhance the positive spillovers coming from innovation and business creation.