Immigrant-Owned Businesses Are More Likely to Innovate

Immigrant-Owned Businesses Are More Likely to Innovate

The findings of a Statistics Canada study are not surprising, as immigrants in Canada are more likely to have been educated in STEM fields (STEM refers to science, technology, engineering, and mathematics) compared to Canadian-born residents.

Small and medium-sized enterprises (SMEs) in Canada that are immigrant-owned are statistically more likely to implement product or process innovations.
Immigrant business owners are 8.6% more likely to innovate a new product and 20.1% more likely to introduce a new process or production method. They are also more likely to find new marketing approaches.

Organizational innovation is relatively similar between immigrant-owned businesses and those owned by Canadian-born individuals.

Both groups are generally similar in their use of intellectual property (IP), although immigrants are more likely to have registered industrial designs when results are adjusted for business and owner characteristics. Differences in the use of other forms of IP—such as patents, registered trademarks, trade secrets, and non-disclosure agreements—are relatively small.

Statistics Canada set out to determine whether the immigration status of a business owner affects a company’s likelihood of innovating or holding intellectual property. This study is part of a broader research project aimed at better understanding what drives innovation and how innovation contributes to success in Canadian businesses.

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

The findings align with the study’s initial hypothesis, as immigrant entrepreneurs are more likely to have advanced education in science, technology, engineering, and mathematics. They are also more likely to engage in international trade and file patents in the United States—factors shown to have a positive correlation with innovation.

The study found that immigrant-owned businesses appear more likely to innovate products or processes regardless of whether the owners are recent immigrants or have been in Canada for a long time. The results hold true whether the business operates in a knowledge-based industry or in the broader economy.

These outcomes may be partly related to differences that are difficult to observe between immigrant and Canadian-born owners, or they may reflect traits often found among immigrants—such as doing business abroad and being exposed to international innovations and technologies.

Statistics Canada stated that future research will examine the sources of immigrant innovation in greater detail.