Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Shayegheh Ashourizadeh*, Mehrzad Saeedikiya, Zeynab Aeeni, Serdar Temiz

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

6 Citations (Scopus)

Abstract

Objective: The article investigates the relative benefit of formality/informality of finance sources for innovation and compares this benefit amongst immigrant and native entrepreneurs. The authors investigate whether formal finance (here, bank loan) benefit innovation more than informal sources (personal savings and friend/family loan). Then, they explore whether an entrepreneur‘s status strengthens or weakens the benefit finance sources for innovation. Research Design & Methods: This study applies a quantitative approach to conduct the research. The data of 15,850 entrepreneurs surveyed by Global Entrepreneurship Monitor in 2015 were analysed using the hierar-chical linear modelling (HLM) technique. Findings: Results indicated that formal finance benefits innovation more than informal sources, and this advantage is the same for both immigrant and native entrepreneurs. Implications & Recommendations: Despite the prevalence of some stereotypes regarding the simplistic and repetitive nature of immigrants ‘ businesses, the study recommends that financial institutions and policymak-ers plan to enhance entrepreneurs ‘ access to formal financial resources irrespective of their migrant status. Policymakers also can plan to increase the immigrant entrepreneurs ‘ access to the formal sources of finance by tailored educations to boost innovation. Contribution & Value Added: The results highlight that immigrant entrepreneurs benefit from formal finance towards innovation similarly to their native counterparts. Such a clarification informs the studies on the liability of foreignness and innovation finance that immigration status cannot be a barrier to innovation as por-trayed and conceptualized by some studies.

Original languageEnglish
Pages (from-to)41-59
Number of pages19
JournalEntrepreneurial Business and Economics Review
Volume10
Issue number2
DOIs
Publication statusPublished - Jun 2022
Externally publishedYes

Keywords

  • entrepreneurial financing
  • immigrant entrepreneurs
  • innovation
  • liability of foreignness
  • native entrepreneurs

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