Immigrant Enclaves and the Success of Entrepreneurial Ventures

Abstract

The present work explores the characteristics of entrepreneurs and their environments that are related to entrepreneurial success. To this end, we examine the relationship between immigrant status and firm location decisions of entrepreneurs and their resultant firm profits and viability. To categorize location decisions, we focus on the concepts of immigrant and ethnic enclaves. Data on entrepreneurs and their beginning firms were provided by the Kauffman foundation and cover the years 2004-2008. These firm-level data are linked to Census 2000 Summary Files 3 and 4 at the zip-code level of measurement and are used to empirically investigate the effect of enclaves. We find no evidence for an effect of the nativity of firm owner on the entrepreneurial success of the firms. We find a statistically significant negative relationship between the immigrant representation in an area and firm profitability.

Keywords: Enclave, Entrepreneurship, Immigrant, Profits

JEL Classification: L25, L26, J61