India Post News Service

NEW YORK: While the contribution of skilled immigrants to America's technology and engineering startups has been recognized for the past decade as critical to the emergence of many of America's most entrepreneurial companies and huge, new industries, little has been known about the backgrounds of these immigrant entrepreneurs. What types of education have these technology and engineering entrepreneurs received?

Why did they come to the United States? A report released June 11 by the Ewing Marion Kauffman Foundation that tracked the educational backgrounds of immigrant entrepreneurs who were key founders of technology and engineering companies from 1995 to 2005 shows a strong correlation between educational attainment (particularly in science, technology, engineering and math) and entrepreneurship.

The study, which could serve as a wake-up call to leaders concerned about America's competitive advantage, shows that 96 percent of immigrant founders of technology and engineering companies held bachelor's degrees and 74 percent held graduate or postgraduate degrees. Seventy-five percent of the highest degrees among immigrant entrepreneurs were in STEM fields (Science, Technology, Engineering and Mathematics).

Moreover, 53 percent of the immigrant founders of US-based technology and engineering companies completed their highest degrees in US Universities. Conducted by researchers at Duke University and the University of California, at Berkeley, the study is a follow-up to a report released in January that showed that in 25.3 percent of technology and engineering companies started in the United States from 1995 to 2005, at least one key founder was foreign-born. Nationwide, these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005. The majority of these immigrant entrepreneurs came from India, United Kingdom, China, Taiwan, Japan and Germany.

"The report raised several questions that I believed needed to be answered to explain why skilled immigrants have had such a disproportionate success in the US," said lead researcher Vivek Wadhwa, executive in residence, Pratt School of Engineering, Master of Engineering Management Program at Duke University. "Some of the questions were: What was the education background of these immigrants? What brought them to the US? Was there a correlation between education, immigration, and entrepreneurship?

Was it just the elite universities in India and China that were graduating these company founders? Was there any correlation between entrepreneurship and immigrant populations in technology centers?" "Our research confirms that advanced education in science, technology, engineering and math is correlated with high rates of entrepreneurship and innovation," said Wadhwa. "The US economy depends on these high rates of entrepreneurship and innovation to maintain its global edge. Our higher education system has historically attracted talented immigrants from around the world to the United States to study.

We now face a choice-to encourage more Americans to complete higher degrees in these fields, or to encourage foreign students to stay in the United States after completing their degrees. We need to do both."The study was based on a series of in-depth interviews with 144 immigrant company founders on their educational attainment, degree types, reasons for entering the United States and other factors related to their entrepreneurial activities; 87 Indian, 57 Chinese and 29 Taiwanese company founders to ask where they received their undergraduate education, and; 1,572 companies in 11 technology centers to determine whether a key founder was foreign-born and the founder's country of birth.

Among the findings are:
1. More than half of the foreign-born founders of US technology and engineering businesses initially came to the United States to study. Very few came with the sole purpose of starting a company. Almost 40 percent of immigrant founders entered the country because of a job opportunity, with only 1.6 percent entering the country with the sole purpose of entrepreneurship. They typically founded companies after working and residing in the United States for an average of 13 years.

2. Immigrant founders were educated in a diverse set of universities in both their home countries and across the United States. No single US institution stands out as a source of immigrant founders. Similarly, those who received their undergraduate degrees in India or China graduated from a diverse assortment of institutions. Even the famed Indian Institutes of Technology educated only 15 percent of Indian technology and engineering company founders.

3. Immigrant entrepreneurs tend to move to cosmopolitan technology centers. The regions with the largest immigrant population also tend to have the greatest number of technology startups. On average, 31 percent of the engineering and technology companies founded from 1995 to 2005 in the 11 technology centers that were surveyed had an immigrant as a key founder. This compares to the national average of 25.3 percent.

4. Technology centers with a greater concentration of immigrant entrepreneurs in their state averages include Silicon Valley (52.4 percent), New York City (43.8 percent), and Chicago (35.8 percent). Three technology centers had a below-average rate of immigrant-founded companies: Portland (17.8 percent), Research Triangle Park (18.7 percent) and Denver (19.4 percent). "The responses paint an interesting portrait of America's immigrant entrepreneurs," said Robert Litan, vice president of Research and Policy at the Kauffman Foundation. "These are individuals who initially entered the United States either as students or as employees of corporations that sponsored their visas, but who eventually created new businesses.

These startup founders are very well educated, particularly in STEM disciplines, suggesting that research, technical education and thought leadership are drivers of new business generation." "Some of the findings weren't a surprise - such as the fact that the vast majority had higher degrees in STEM related fields," adds Wadhwa. "But it was surprising that the school they graduated from in their home countries didn't matter. For example, only 15% of all the Indian company founders in the U.S. were graduated of one of the 7 Indian Institute's of Technology. This shatters the myth that Indian tech founders are predominantly IIT graduates.

However, in Taiwan, the 55% received their education from 2 elite universities (National Taiwan and National Chiao Tung Universities)."Wadhwa further says, "We also found that some tech centers were much better at attracting immigrants than others. For example in New York, 42.8% of the tech firms had immigrant founders, Chicago, 35.8%, Boston, 31%, vs. 19.4% in Denver and 18.7% in RTP. Seattle had about twice the immigrant startups as the rest of the state (23.4% vs. 11.3%)." In a research and policy guide for transforming the US economy toward an innovative entrepreneurial economy published earlier this year, Kauffman Foundation researchers said the nation could benefit from more enlightened immigration policies, designed to attract and retain highly skilled foreign workers and potential entrepreneurs.