Resources and Growth in Immigrant-run Businesses

Entrepreneurship among immigrants is an important driver of economic development, despite this group’s frequent lack of economic, human, and social capital. While human capital theory suggests that managers’ human capital may positively impact the growth and survival of their firms, theories of ‘ethnic enclaves’ argue that social capital in terms of networks might alleviate the lack of financial and human capital resources of immigrant entrepreneurs. Still, there is a dearth of empirical evidence on how specific social and economic structures shape the performance of firms run by immigrants. This paper seeks to explain difference in performance in terms of revenue growth in a comparative study of immigrant and native CEOs. Using data on 50,002 privately held firms in Sweden followed over 4 years, we find that revenue growth differs depending on whether the firm is run by an immigrant or not, and that there are significant differences in factors that affect growth. Interestingly, our findings also show tha...