NEW RESEARCH | Migrant entrepreneurs as successful as Swedish-born

Migrants in Sweden are less likely to start businesses in STEM fields than Swedish-born people. But when they do, their businesses are at least as successful – sometimes more so.

This is shown by Linda Dastory in her doctoral thesis where she compared Swedish-born and three groups of immigrants: EU migrants, non-EU migrants and refugees.

– We see that the likelihood of starting a business in the field of science and technology (STEM) is significantly higher for Swedish-born people. But given that a migrant starts a business, they earn at least as much, in some cases more, she says.

The results differ from the US, where immigrants start more businesses than the native-born. One explanation is Sweden’s social security system and regulations.

– In the US, you may be forced to start a business to survive. In Sweden, there are safety nets, but also more administrative barriers. Validating degrees or understanding the regulatory framework are major challenges for many migrants, emphasizes Linda Dastory.

Success factors

The explanation for the particular success of some immigrant groups in their STEM businesses may lie in self-selection.

– People who choose to move, for example from other EU countries, may have a particular drive or skill set. Refugees, on the other hand, are seen more as randomly selected, but their businesses are at least as productive as those of Swedish-born people.

From a policy perspective, the advice is clear.

– We need to make it easier for migrants to start businesses. It’s about regulatory simplification, but also about support. For example, adapting application processes in English, offering incubators and helping to navigate the Swedish system, explains Linda Dastory, highlighting the importance of understanding the potential of entrepreneurship in a demographically challenging time.

– We have an ageing population and a need for labor. If migrants are given the right conditions, their businesses can create both jobs and growth, she says.

Contact linda.dastory@indek.kth.se

More about the thesis
Linda Dastory recently defended her thesis at KTH Innovation, Technical Change and the Labor Market. The thesis also includes studies on financing constraints for innovation along firm size, how technical change reshapes tasks and wages in Sweden, and financing of SMEs in Germany before and after the 2008 financial crisis.