Immigrant businesses export more, but earn less
TORONTO -- While immigrant entrepreneurs have the kind of knowledge, language skills, experience and contacts that allows them to do business in global markets relatively well, a new study finds that the risk may not reap the financial rewards.
The study by Dr. Horatio M. Morgan and Dr. Sui Sui – both Associate Professors of Global Management at Ryerson University’s Ted Rogers School of Management – analyzed the export activity and profitability of nearly 10,000 small and medium-sized businesses (SMEs) in Canada and found that immigrant owners are more heavily involved in exporting than comparable non-immigrant ones, but are less financially successful.
According to Dr. Sui, “our research suggests that the full potential of immigrant entrepreneurs can be realized if their unique insights are combined with a greater awareness of some of the pitfalls or downsides of import-export business.”
While the study, called “Are SMEs with immigrant owners exceptional exporters?”, underscores that immigrant entrepreneurs may be disadvantaged in ways that are difficult to properly measure, it maintains that the evidence overwhelmingly points to psychological forces at work rather than economic ones.
According to Dr. Morgan, because immigrant entrepreneurs have familiarity with certain global markets, they have confidence in their ability to do business in them, and may take more chances than they should. “These entrepreneurs think conducting business outside Canada will be easy, or at least, manageable – if things go bad, they can handle it,” he explains. “The problem is, however, when things don’t work out on the international stage, they have a lot more to lose than Canadian-born entrepreneurs who are more cautious to begin with.”
Dr. Sui points out that having an immigrant background can, in fact, be a double-edged sword. “While it embodies knowledge and experience that are particularly helpful for conducting business globally, such competencies could cause overconfidence at the levels that cloud one’s judgment; and ultimately, lead to poor performance,” she explains.
Dr. Morgan and Dr. Sui’s research study will be published in an upcoming issue of the Journal of Business Venturing (external link, opens in new window) , which is ranked #17 among the Financial Times (FT) 50 journals, and rated a 4 on the Association of Business Schools (ABS) list.
About the Ted Rogers School of Management at Ryerson University
Home to nearly 10,000 students and more than 250 industry-connected faculty, the Ted Rogers School of Management (TRSM) at Ryerson University is Canada's leading diverse, entrepreneurial business school centred in an urban learning environment. TRSM is Canada's largest English language business school. TRSM is developing collaborative, creative leaders who will drive 21st century business forward while making a positive impact on society.
Media Contacts
Paul Cantin
Director, Marketing & Communications
Ted Rogers School of Management
pcantin@ryerson.ca
