Immigration as a Component of Americas 21st Century Business Model

Joel Kotkin, a presidential fellow at the urban futures at Chapman University, recently wrote an editorial for Forbes Magazine on a new 21st Century Business Model for the United States. This article focuses on the positive economic impact of immigrants in the United States.

The article notes:

In our globalized economy, the most enthusiastically touted approaches are those adopted by centralized, state-dominated economies such as China, Brazil and Russia as well as--somewhat less oppressively--those of the major E.U. states.

Yet the U.S. may well be constructing the best sustainable business model for the 21st Century. It is an approach built on the country's greatest enduring strength--an innovative business culture driven increasingly by a diverse pool of immigrants.

The article puts forth a narrative that highlights America's unique ability to take all manner of people and integrate them into a cohesive business model, while also showing that the complexion of the American Business model is changing:

If the U.S. wants to retain pre-eminence, it needs to go with what makes it a great country: its protean national and increasingly post-racial business culture.

This evolution is increasingly evident at the very top of our economy

1. Between 1990 and 2005 immigrants started one quarter of all venture-backed public companies.

2. Large American firms are also increasingly led by people with roots in foreign countries Including 14 of the CEOs of the 2007 Fortune 100. 

3. Even the top tier of corporate America--once the almost-exclusive reserve of native-born Anglo-Saxon--increasingly reflects the diversification of the larger society.

The financial benefit to the country is significant:

Already, for example, eight Indian American CEOs run U.S. corporations with over $2 billion in sales, including companies like Citicorp, Adobe Systems and Pepsico. Pepsi's historic rival, Coca Cola, is now run by Muhtar Kent, a native of Turkey. Foreign CEOs also include Kellogg's Australian-born David Mackay and Ethan Allen's M. Farooq Kathwari, yet another native of India.

It is important to note that this is not just a high skilled immigrant phenomena:

Immigrant commerce also thrives at the grassroots level. It manifests most visibly in the proliferation of small stores, restaurants, food-processing businesses, garment factories and trucking lines.

Overall, immigrants are 60% more likely to start a new business than native-born Americans. The number of self-employed immigrants has grown even in New York City, where the number of self-employed among the native-born has dropped.

Immigrant businesses have thrived by providing basic services, such as banks, insurance agents, funeral homes and grocery stores. Some of these businesses arose because the mainstream community had failed to identify opportunities in these markets or had consciously decided to exclude them.

This trend will only continue in the future:

One critical harbinger can be seen in the current crop of students at top U.S. business schools. Between one-third and one-half all students at Stanford, MIT, University of Pennsylvania, University of Chicago and UC Berkeley come from abroad. These schools are training camps for immigrants transitioning into careers as American entrepreneurs.

The article also does a great job of placing the current influx of immigrants in a more historical context by looking at the effect of earlier ethnic groups positive impact on the American economy.

This is a great read and one that focuses on the broader immigration economic picture, which is that in an increasingly globalized economy having a diverse population is a net positive.