What Makes You Most Likely to Become an Entrepreneur? Your Parents
Q&A with Yong Suk Lee, deputy director of the Korea Program at Shorenstein APARC and the SK Center Fellow at the Freeman Spogli Institute for International Studies. Featuring Charles “Chuck” Eesley, associate professor and W.M. Keck Foundation faculty scholar in the Department of Management Science and Engineering. Written with Noa Ronkin, APARC’s associate director for communications and external relations.
Stanford has long been a hub for innovation and entrepreneurship, but few have explored how alumni entrepreneurship rates differ by ethnicity and nationality. How do Asian American and non-American Asian alumni compare in their entrepreneurship activities? And how do the rates change with participation in university education programs?
Stanford researchers Yong Suk Lee and Charles “Chuck” Eesley used the Stanford Innovation Survey to answer these questions. Their new Research Policy study, “The persistence of entrepreneurship and innovative immigrants,” is the first to use this data. Lee sat down with Noa Ronkin to discuss the study’s findings and policy implications.
Why this project?
I was already studying entrepreneurship when I met Chuck Eesley, who focuses on the role of institutions and universities in technology entrepreneurship. I learned that Chuck had conducted the Stanford Innovation Survey and that he hadn’t had the opportunity to dig fully into the data. One question I had in mind was: What does entrepreneurship look like among Stanford alumni when you compare Asian Americans to non-American Asians, who enrolled at Stanford as foreign students? It turned into a productive relationship between Chuck and me. We are now working together on a number of other projects as part of the Stanford Cyber Initiative.
What does the Stanford Innovation Survey have that other data sets do not?
Finding information about young startups and their founders is a challenge. In many cases researchers look at people who became successful entrepreneurs after graduation, a select population that doesn’t allow you to examine who becomes an entrepreneur. The Stanford Innovation Survey addresses this problem. Our data set comprises a sample of ALL alumni from the 1930s, who were not selected based on their successful entry into entrepreneurship. It includes information on their ethnicities and nationalities, and tells us who came from entrepreneurial families and who came from immigrant and first-generation American families. Most vitally, the survey allows us to examine how participation in university entrepreneurship education programs affects one’s career choices.
Did you find differences between Asian Americans and non-American Asians?
Among Stanford alumni, Asian Americans are quite entrepreneurial, even more so than white Americans (with 3.3% higher startup rate), but Asians of foreign nationality are substantially less so (they have about 12% lower entrepreneurship rate). This holds for investing or utilizing Stanford networks to find funding sources or partners. Societal institutions and upbringing create a major gap regardless of cultural similarities, and Stanford’s education programs do little to fill it. Non-American Asians have lower participation rates, and their participation does little to increase their likelihood of becoming entrepreneurs.
Finally, we find that parental status is a strong predictor of student entrepreneurial career decisions. Asians, especially non-American Asians, are less likely to have parents who are entrepreneurs, but non-American Asians are more likely to continue entrepreneurship across generations than Asian Americans. The correlation between one’s entrepreneurship status and one’s parents’ entrepreneurship experience is particularly high for East Asians (e.g., Koreans and Chinese) compared to U.S. citizens, for whom it doesn’t differ by ethnicity.
Do your findings apply beyond Stanford alumni?
Clearly the sample of Stanford alumni isn’t representative of the general population, but results might apply to selective-admission college-educated alumni. Because of its connection with Silicon Valley, Stanford plays a significant role in entrepreneurship and innovation, and understanding entrepreneurship activity here is critical to understanding how social environments influence it.
How might your study affect policy?
This study speaks to the need to develop a more nuanced discourse of immigration policy. Current discussions of immigration policy are often consumed by debates about low-skilled immigrants, but our findings suggest that high-skill immigration policy should be examined and evaluated separately. They also suggest that we should not just look at entrepreneurship and job creation by immigrants, but also consider long-run effects. Allowing immigrants to settle in and attain the cultural and institutional features of the American education system at a young age could positively influence entrepreneurship and innovation, at least among high-skilled populations.
There may be lessons here for Asian countries that are pursuing policies to promote entrepreneurship and innovation. The low levels of parental entrepreneurship and the high intergenerational persistence in entrepreneurship that we see among non-American Asians may reflect socio-economic constraints in Asian countries. Sending their young people for education abroad with the goal of bringing them back home isn’t enough to break these constraints. Developing policies that promote transnational bridging could encourage high-skilled Asian Americans and emigrants that choose to remain here after education to engage with their home countries.
