Immigrant-owned businesses more likely to innovate

Shelby Thevenot
Published: June 15, 2020

Small and medium-sized businesses in Canada that are owned by immigrants are statistically more likely to implement a product or process innovation.

Immigrant business owners are 8.6 per cent more likely to innovate a new product, and 20.1 per cent more likely to innovate on production processes or methods. They were also more likely to find new ways of marketing. Organizational innovation was relatively the same for businesses owned by immigrants and Canadian-born individuals.

Both groups were largely similar in their use of intellectual property, though immigrants were more likely to have registered industrial designs when results were adjusted for firm and owner characteristics. There was relatively little difference in terms of intellectual property use of patents, registered trademarks, trade secrets, and non-disclosure agreements.

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Statistics Canada set out to determine whether the immigration status of a business owner affected whether or not a firm would implement an innovation or hold intellectual property. The study is part of a broader research project to better understand what leads to innovation, and how innovation leads to success in Canadian businesses.

The results were gathered from data in the 2011, 2014, and 2017 versions of the Survey on Financing and Growth of Small and Medium Enterprises.

The results were congruent with the study’s original hypothesis, as immigrant entrepreneurs are more likely to be highly educated in the fields of science, technology, engineering, and mathematics. They are also more likely to trade internationally and file patents in the U.S. These factors have shown to positively correlate with innovation.

The study found immigrant-owned businesses appear to be more likely to innovate products, or processes regardless of whether they are a recent immigrant or not. Results were the same when looking at whether the business was in a knowledge-based industry or a part of the economy as a whole.

The results may be partially related too unobserved differences between immigrant owners and Canadian-born owners, or it may reflect characteristics primarily found among immigrants such as doing business abroad, and exposure to international innovations and technologies.

Statistics Canada says future research will look at the sources of immigrant innovation in more detail.

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