Journal of Small Business & Entrepreneurship

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Immigrants as Extraordinarily Successful

Entrepreneurs: A Pilot Study of the Canadian
Experience

Margaret Dalziel

To cite this article: Margaret Dalziel (2008) Immigrants as Extraordinarily Successful

Entrepreneurs: A Pilot Study of the Canadian Experience, Journal of Small Business &
Entrepreneurship, 21:1, 23-36, DOI: 10.1080/08276331.2008.10593411

To link to this article: https://doi.org/10.1080/08276331.2008.10593411

Published online: 19 Dec 2012.

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Dalziel.qxp 11/9/2007 8:59 AM Page 23

Immigrants as Extraordinarily Successful

Entrepreneurs: A Pilot Study of the Canadian
Experience
Margaret Dalziel, Telfer School of Management, University of Ottawa
ABSTRACT. As extraordinarily successful entrepreneurs may come to lead large firms that are global players,
explanations of extraordinary entrepreneurial success can usefully combine findings from entrepreneurship and
strategy. Entrepreneurship considers personality traits and social networks as predictors of entrepreneurial
success, while strategy considers firm resources and capabilities and membership in favourable industries as
predictors of firm performance. Combining these insights, I suggest that effective personality traits and social
networks may equip an entrepreneur to invest in and gain access to valuable resources and capabilities and to
survive in a high-growth industry, and to thereby achieve extraordinary entrepreneurial success. On the basis that
immigrants may be more likely than non-immigrants to have personality traits and social networks that are
conducive to entrepreneurial success, I test and find support for the hypothesis that amongst highly successful
Canadian entrepreneurs, immigrants will be more successful than non-immigrants.
SOMMAIRE. Lorsque des entrepreneurs couronnés de succès se trouvent à la tête d’entreprises de renommée
mondiale, l’expliquation de cette réussite extraordinaire peut utilement s’inspirer des découvertes en entrepre-
neuriat et en stratégie. L’entrepreneuriat voit dans les traits de personnalité et les réseaux sociaux des prédicteurs
de réussite, tandis que la stratégie voit des prédicteurs de performance dans les ressources et les capacités d’une
firme, ainsi que dans son affiliation à des industries favorables. En combinant ces deux démarches, je suggère
que des traits de personnalité et des réseaux sociaux efficaces peuvent permettre à un entrepreneur d’investir
dans des ressources et des capacités de valeur, de survivre dans une industrie à croissance rapide, et donc d’être
couronné de succès. Partant de l’idée que les immigrants sont plus susceptibles que les non-immigrants de
posséder des traits de personnalité et des réseaux sociaux propices à la réussite entrepreneuriale, j’ai testé et
confirmé l’hypothèse que parmi les entrepreneurs canadiens couronnés de succès, les immigrants surpasseront
les autres.

Introduction
In the US and Canada, there are many examples of immigrants who have become
extremely successful entrepreneurs. In the US, leading firms such as Intel, Yahoo!, and
eBay were all founded by immigrants (Forbes, 2006). In Silicon Valley, people of Chinese
and Indian ancestry are disproportionately likely to lead high-technology firms (Saxenian,
1999). In Canada, leading immigrant entrepreneurs include Terry Matthews who immi-
grated to Canada from Wales at the age of 26 and went on to found leading communica-
tions systems firms such as Mitel and Newbridge Networks, and K.Y. Ho who immigrat-
ed to Canada from Hong Kong at the age of 34 and went on to found ATI, a leading semi-
conductor firm. And the phenomenon of immigrant entrepreneurial success is not new.
During the 19th and 20th centuries immigrants played a major role in developing
Canadian businesses and institutions (Acheson, 1972). Do these stories capture our atten-
tion because they reinforce the romantic notion of the heroic entrepreneur (Schumpeter,
1934)? Or, is it really the case that amongst a sample of highly successful entrepreneurs,
immigrants will outperform non-immigrants?
The entrepreneurship literature has not yet addressed this question and its pursuit
presents the same methodological challenge that has faced previous investigations of

Journal of Small Business and Entrepreneurship 21, no. 1 (2008): pp. 23–36 23
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24 DALZIEL

extraordinary business success (Bhidé, 2000; Collins, 2001). Such studies have explicitly
sampled on the dependent variable to determine the predictors that distinguish between
success and extraordinary success. A random sample will contain so few cases of extraor-
dinary success that the predictors that are most likely to be significant are those that dis-
tinguish between non-success and success, not those that distinguish between success and
extraordinary success. Anticipating this problem, Bhidé based his examination of high-
growth ventures on a sample drawn exclusively from the Inc. 500, a list of the fastest
growing firms in the US. Similarly, Collins based his examination of extraordinary turn-
arounds on an examination of the very small number (11) of publicly traded firms in the
US that had experienced a dramatic turnaround in market value, and that had subsequent-
ly outperformed their industry peers over a 15-year time period. Collins’ finding that
humility is one of the factors that distinguishes great leaders from good leaders may not
have been observable had his sample included many instances of unsuccessful and mod-
estly successful turnarounds.
Following Bhidé and Collins, I explicitly sample on the dependent variable to exam-
ine the relationship between the entrepreneur’s immigrant status and firm performance
amongst a sample of highly successful entrepreneurs. The approach is illustrated in Figure
1, below. Figure 1a shows a positive relationship between education and entrepreneurial
success amongst a random sample of entrepreneurs. But Figure 1b shows that when the
sample is structured so as to include only highly successful entrepreneurs, the relationship
between the level of education and entrepreneurial success may change. Similarly, Figure
1c shows a negative relationship between the entrepreneur’s immigrant status and entre-
preneurial success amongst a random sample of entrepreneurs. But Figure 1d shows that
when the sample is structured so as to include only highly successful entrepreneurs, the
relationship between immigrant status and entrepreneurial success may change. In gener-
al, studies that sample on the dependent variable may reveal different relationships
between independent and dependent variables than those revealed by studies that employ
random samples. Like Bhidé and Collins, I reply upon this fact to investigate the factors
associated with extraordinary success and make no claim that my findings are generaliz-
able to the broader population.
My subject can be contrasted with the large body of research on ethnic entrepreneurs
(Aldrich and Waldinger, 1990; Etemad and Wright, 2003; Portes, 1995; Stiles and
Galbraith, 2004). While I am focused on highly successful entrepreneurs, research on eth-
nic entrepreneurs has focused on residentially concentrated groups of entrepreneurs of
common ethnicity (Menzies, Brenner and Filion, 2003). While the entrepreneurs in my
sample have founded globally competitive firms, the firms founded by ethnic entrepre-
neurs typically serve ethnic customers or the kinds of niche markets that are avoided by
large firms. These include markets that are underserved or abandoned, that exhibit low
economies of scale, that are subject to fluctuating demand, or that are composed of cus-
tomers with exotic tastes (Waldinger, Aldrich and Ward, 2000). There is likely little over-
lap in the types of firms in my sample and the firms in the types of samples that are com-
monly employed in studies of ethnic entrepreneurship. As a consequence, explanations of
entrepreneurial success among ethnic and immigrant entrepreneurs, such as the ability to
speak the language of the host country (Hiebert, 2002), are not expected to apply. The dif-
ference between immigrant and ethic entrepreneurs can be illustrated with reference to the
high technology cluster in Ottawa, Canada. The five most significant entrepreneurs in the
cluster are Terry Matthews, Michael Cowpland (Mitel and Corel), Michael Potter
(Cognos), Jozef Straus, (JDS Fitel, now JDS Uniphase) and Rod Bryden (Systemhouse)
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IMMIGRANTS AS EXTRAORDINARILY SUCCESSFUL ENTREPRENEURS 25

Figure 1. A Comparison of the Effects of Employing Random and Structured Samples in the Study of Predictors
of Entrepreneurial Success.
Figure 1a (top left): Random sample showing positive relationship between entrepreneur’s education and entre-
preneurial success.
Figure 1b (top right): Structured sample showing negative relationship between entrepreneur’s education and
entrepreneurial success where success is above cut-off.
Figure 1c (bottom left): Random sample showing negative relationship between entrepreneur’s immigrant sta-
tus and entrepreneurial success.
Figure 1d (bottom right): Structured sample showing positive relationship between entrepreneur’s immigrant
status and entrepreneurial success where success is above cut-off.

(Information Technology Association of Canada, 2002). Of the five, four are immigrants
(Bryden was born in Canada) but only one is not Anglo-Saxon (Straus is Czech).
In the theory section that follows, I consider why immigrants might be expected to be
more successful than non-immigrants amongst highly successful entrepreneurs. An empir-
ical test of the relationship between immigrant status and firm performance on a sample
of 52 highly successful Canadian entrepreneurs provides support for the hypothesis that
amongst highly successful entrepreneurs, immigrants will be more successful than non-
immigrants. In the discussion section I consider the implications of the finding and pro-
pose avenues for future research.
From Entrepreneurial Success to Superior Firm Performance:
The Differential Ability of Immigrants
While theories of entrepreneurial success that are designed to differentiate between
success and failure may be justified in overlooking well-established theories of superior
firm performance from the strategy literature, a theory of extraordinary entrepreneurial
success must make the connection. In many cases an extraordinarily successful entrepre-
neur will eventually be leading a large firm that is a global player—exactly the type of
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26 DALZIEL

firm that has been the object of study of strategy scholars. In the following I describe how
the personality traits and social networks of entrepreneurs, factors that have been associ-
ated with success in the entrepreneurship literature (Baum and Locke, 2004; Granovetter,
2000), may impact the resources and capabilities of the firms that they lead, and their
firm’s prospect for survival in turbulent, high-growth industries, factors that have been
associated with superior firm performance in the strategy literature (Teece, Pisano and
Shuen, 1997; McGahan and Porter, 1997). I then argue that amongst highly successful
entrepreneurs, the personality traits and social networks of immigrants and non-immi-
grants can be expected to differ systematically, and that the attributes of immigrants may
be more conducive to extraordinary entrepreneurial success than those of non-immigrants.
Personality Traits
Among the personality traits that have been associated with entrepreneurial success
are a need for achievement (Lee and Tsang, 2001; McClelland, 1961), a propensity for
risk-taking and a tolerance of ambiguity (Teoh and Foo, 1997), and tenacity and passion
(Baum and Locke, 2004). The associations have been made by researchers, business peo-
ple, and the general public but have been difficult to demonstrate empirically for several
reasons. First, there is the question of whether or not the right traits have been identified.
Based on this concern, Baum and Locke (2004) abandoned the conventional list of traits
and found support for traits (tenacity and passion) that had not been considered previous-
ly. Also, there are many types of entrepreneurs and entrepreneurial undertakings, and the
traits that are associated with firm performance in one situation may not be pertinent in
another. Second, cultural differences may impact the relationship between personality
traits and their expression through entrepreneurial undertakings. For example, de Pillis
(1998) found while Irish and American students had similar levels of achievement moti-
vation, achievement motivation predicted entrepreneurial intention only in the American
sample. She attributed her finding to the fact that entrepreneurship is not highly regarded
in Irish society. Third, behaviour changes according to situation, so in some cases the rela-
tionship between traits and firm performance is not direct but is mediated by constructs
that are specific to the entrepreneurial activity (Baum and Locke, 2004; Teoh and Foo,
1997). And finally, as entrepreneurial success depends on qualities of both the individual
and the opportunity, investigations that do not control for the nature of the opportunity are
unlikely to find a relationship between individual traits and entrepreneurial success (Dew,
Velamuri and Venkataraman, 2004).
Based on a study of entrepreneurs whose firms were included on the Inc. 500 list of
the fastest growing firms in the US, Amar Bhidé concluded that a tolerance of ambiguity
was the personality trait that allowed entrepreneurs to create firms that would later
become very successful (Bhidé, 2000). By nature, human beings are averse to ambiguity,
meaning they would rather bet on known rather than unknown probabilities (Ellsberg,
1961). But ambiguity aversion disappears where subjects have context-related compe-
tence (Heath and Tversky, 1991), and entrepreneurs that have unique knowledge of new
technological or market opportunities may be more likely to invest in the pursuit of such
opportunities than other individuals without such knowledge. So a high tolerance of ambi-
guity may allow an entrepreneur to pursue an ambiguous opportunity in an emerging mar-
ket where customers are not well informed with respect to desirable product attributes,
and where the regulatory and institutional environment may be unclear. An early start
may, in turn, allow the entrepreneur to gain unique knowledge regarding the opportunity
such that while it continues to look uncertain to non-participants, the entrepreneur is
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IMMIGRANTS AS EXTRAORDINARILY SUCCESSFUL ENTREPRENEURS 27

beginning to understand how to create an appropriate product offering and business model.
As per Heath and Tversky (1991), such context-related competence will lead to a reduction
in ambiguity aversion, and may therefore induce the entrepreneur to invest further.
In some cases the early start and continued investment will lead to the development of
the types of firm resources and capabilities that are associated with sustained competitive
advantage and superior firm performance (Penrose, 1959; Teece, Pisano and Shuen,
1997). Such resources are unique and firm-specific, and their development is subject to
time compression diseconomies (Dierickx and Cool, 1989). It may take an individual with
distinctive personality traits to invest the development of unique firm resources before
their value is evident. So while the founding CEO may only have a modest direct impact
on firm performance once other factors have been controlled for (Nelson, 2003), the per-
sonality traits of the founding entrepreneur may influence the development of the firm’s
resources and capabilities, and thereby indirectly influence its performance over the long
term.
Social Networks
Based on a consideration of the social relations of business people in a variety of cul-
tures, Granovetter (2000) develops a description of the nature of social relations that best
support entrepreneurial activity. Granovetter first observes that in societies where trust is
low, business people operate independently from one another and consequently fail to
develop businesses of efficient scale. But in societies where social concerns dominate
over economic concerns, businesses become bloated and inefficient from hiring too many
friends and family members. So social concerns must neither be absent nor overbearing,
and this appears to be more readily accomplished in societies where there is respect for
authority relations. In such societies, a hierarchical authority structure can be used to
address economic concerns while peer relations can be used to accommodate social rela-
tions. An example is the Chinese kinship group in which the eldest male is clearly in
charge. Also, in societies where social networks are limited in scope by geographic region,
it may be easier for business people to strike a balance between social and economic con-
siderations because the number of people that can make social claims on a business is lim-
ited to the people from the region. Granovetter again refers to the Chinese whose social
networks, or bangsa, are defined by geographic region.
Following Granovetter, we can conclude that from an entrepreneurial perspective, the
ideal social network will balance social and economic considerations, and will benefit
from circumstances that allow economic considerations to prevail when necessary. In his
words:
What we must look for then, in understanding successful entrepreneur-
ial activity, is some combination of social cohesion sufficient to enforce
standards of fair business dealing and an atmosphere of trust, along with
circumstances that limit the noneconomic claims on a business that pre-
vent its rationalization. (Granovetter, 2000: 258)
Some social networks contain structural holes where sub-networks are disconnected
from one another (Burt, 2000). Network brokers that bridge structural holes benefit from
access to multiple sources of non-redundant information and resources by virtue of being
connected to several otherwise unconnected network agents. For example, product devel-
opment firm IDEO has been immensely successful in developing innovative new products
by working with clients in some 40 different industries, learning about technological
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28 DALZIEL

solutions in use in one industry and applying them to other industries (Hargadon and
Sutton, 1997). But the network broker role is difficult to perform. A broker that is not fully
integrated into any given network may not benefit from the trusting relations that are asso-
ciated with networks with high degrees of closure (Coleman, 1988). This may be why in
some cases firms that are network brokers are less innovative than firms that are not
(Ahuja, 2000). Again the conclusion is that the ideal social network may be a matter of
balance. A network with brokerage opportunities provides access to otherwise unavailable
information and opportunities, while a network that exhibits a high degree of closure facil-
itates the development of trusting relations (Brüderal and Preisendörfer, 1998; Licht and
Siegel, 2006; Uzzi, 1997).
A firm with a social network that includes both trusting relations supported by network
closure, and far-reaching relations that cross structural holes, may be well positioned to
develop valuable resources and capabilities and to survive in turbulent, high-growth
industries. Consensual, trusting relations are required to address non-decomposable prob-
lems, and it is through the resolution of such problems that firms develop valuable capa-
bilities (Nickerson and Zenger, 2004). Authority relations and market-based relations are
better suited to addressing partially and fully decomposable problems, respectively
(Nickerson and Zenger, 2004). Both trusting relations and far-reaching market-based rela-
tions may increase the likelihood of firm survival in high-growth but possibly turbulent
industries. Trusting relations may facilitate reciprocal exchanges in times of difficulty, and
far-reaching market-based relations may provide early information on negative events and
options for a greater range of responses. While most new firms that participate in high-
growth industries may fail, the ones that survive may do extraordinarily well.
Immigrants as Extraordinarily Successful Entrepreneurs
Amongst a random sample of entrepreneurs, immigrants may perform less well than
non-immigrants because immigrants may have greater difficulty operating in the language
of the host country, may have lower levels of education, or may have poorer access to
financial resources (Hiebert, 2002; Tiendra and Raijman, 2004). But amongst a structured
sample of highly successful entrepreneurs, such attributes are not expected to distinguish
between success and extraordinary success. Where a high level of success is a given, vari-
ability in entrepreneurial success may be best explained in terms of the attributes of entre-
preneurs that can be linked to the development of valuable firm resources and capabili-
ties, and to differing prospects for success in turbulent, high-growth markets. As the entre-
preneur’s personality traits and their social networks may be linked to differences in their
firm’s ability to acquire valuable resources and capabilities, and to survive in turbulent,
high-growth markets, groups of entrepreneurs with advantageous personality traits and
social networks may be expected to outperform other entrepreneurs.
An individual that chooses to immigrate consciously abandons a known environment,
culture, social relations, and possibly the ability to be understood in his or her mother
tongue. In return they are provided with no assurances but only possibilities. An individ-
ual that makes such a choice has demonstrated distinctive and possibly advantageous per-
sonality traits that may include a high tolerance of ambiguity, a propensity for risk taking,
and perseverance. This would not apply in cases where immigration is not a choice, where
the individual is forced to immigrate to escape persecution or obliged to immigrate
because the individual is a child whose parents have chosen to immigrate, but where
immigration is a choice, the choice may reflect personal characteristics that are conducive
to entrepreneurship.
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IMMIGRANTS AS EXTRAORDINARILY SUCCESSFUL ENTREPRENEURS 29

The social networks of immigrants may better support entrepreneurial activities than
those of non-immigrants as they may simultaneously exhibit greater degrees of network
closure and superior brokerage opportunities. Portes and Sensenbrenner (1993) identify
two sources of social capital that are available to immigrants but not to non-immigrants,
and that have their antecedents in the discrimination faced by immigrants. Bounded soli-
darity is a source of social capital for immigrants that have been able to counter the effects
of discrimination with altruistic support of community members (Portes and
Sensenbrenner, 1993). Its instrumental counterpart is the enforceable trust source of social
capital, that allows immigrants to use trust to reduce the transaction costs of economic
exchange (Portes and Sensenbrenner, 1993). Immigrants may also benefit from strong
social relations that are customary in their home country, but that are prevented from
becoming overwhelming in the host country by geographic and cultural distance.
Superior brokerage opportunities are available to transnational entrepreneurs, “self-
employed immigrants whose business activities require frequent travel abroad and who
depend for the success of their firms on their contacts and associates in another country,
primarily their country of origin” (Portes, Haller and Guarnizo, 2002: 287). For example,
the networks of Asian entrepreneurs in Silicon Valley connect them to markets, manufac-
turing capabilities, and capital in Asia (Saxenian, 1999). Transnational entrepreneurs are
becoming increasingly prevalent and important, suggesting that immigrant entrepreneurs
may, in some respects, be advantaged, relative to non-immigrant entrepreneurs (Saxenian,
2002). As immigrants may differ systematically and advantageously from non-immigrants
in terms of their personality traits and social networks, amongst highly successful entre-
preneurs, immigrants may be expected to be more successful than non-immigrants.
Hypothesis 1 tests this assertion:
Hypothesis 1: Among highly successful entrepreneurs, immigrants are
likely to be more successful than non-immigrants.
Methods and Results
With high levels of entrepreneurship and a high level of immigration, Canada is a
favourable country in which to test the hypothesis. Approximately 135,000 new business-
es are founded in Canada each year (Industry Canada, 2005) and some 180,000 people
immigrate to Canada each year, over 0.5% of the population (Statistics Canada, 2004).
Unfortunately, data sources that combine information on firms with information on the
personal attributes of entrepreneurs are few (Aldrich and Waldringer, 1990). The
Canadian Small and Medium Sized Enterprises Financing Data Initiative is an exception,
insofar as it has data on both firms and entrepreneurs, but its survey asks only about the
ethnicity of entrepreneurs and where they have lived for the last five years, and not about
their country of birth (SME FDI, 2004). As a consequence of the lack of comparative data,
researchers have tended to focus on studying immigrant entrepreneurs and to forego stud-
ies that compare immigrant to non-immigrant entrepreneurs (Aldrich and Waldinger,
1990). Some researchers have used rich databases on the backgrounds and activities of
immigrant entrepreneurs (Froschauer, 2001; Hiebert, 2002), and others have collected pri-
mary data on immigrant entrepreneurs in specific geographic regions (Jones, 2004; Portes,
Haller and Guarnizo, 2002; Tiendra and Raijman, 2004). One approach to comparing
immigrant and non-immigrant entrepreneurs is to infer immigrant status from the entre-
preneur’s name (Saxenian, 2002), but this confounds immigrant status with ethnicity. To
test the relation between the entrepreneur’s immigrant status and firm performance in the
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30 DALZIEL

absence of suitable secondary data, I use a structured sample of highly successful entre-
preneurs and obtained information on their country of birth.
Sample
Hypothesis 1 is tested on a sample of 52 highly successful founder-led firms from
across Canada. I consider a firm to be founder-led as long as the founder plays a leading
operational role or oversight role such as CEO or chair of the board of directors. Data
were gathered by MBA students at the University of Ottawa. Students were instructed to
gather data on a successful Canadian entrepreneur where success could be defined in one
of two ways. “Conforming” instances of success, where success was defined in financial
terms, were cases where the firm was large and mature, or growing sufficiently quickly to
be eligible for inclusion on the Profit100 (this required five years of high growth in rev-
enues starting from a base of at least $100K). Of the 69 students, 62 submitted conform-
ing cases of success. “Non-conforming” instances of success were cases where the firm
was a technological leader that had modest or no revenues (six cases), or where the entre-
preneur was someone the student respected for social reasons (one case). Some students
gathered data through in-person or telephone interviews with the entrepreneur, but the
majority consulted publicly available information. Cases that were dropped from the sam-
ple included the seven non-conforming cases, one case where the firm was privately trad-
ed and revenues could not be verified, one firm that was started by a Canadian in the US,
and eight cases where the annual revenues were less than the cut-off of $10 million estab-
lished as the benchmark for a high level of entrepreneurial success. Including these last
eight firms in the analysis has no effect on the results.
The firms in the sample had an average of 5407 employees in 2004, average annual
revenues in 2004 of $1.4 billion (all revenue figures are in Canadian dollars), and an aver-
age age in 2005 of 21.6 years. Where the firm no longer existed in 2004 (two firms in the
sample were acquired), the figures used for employees and annual revenues refer to the
maximum numbers attained by the firm during its lifetime. Given that in Canada only
0.3% of business establishments employ 500 or more people (Industry Canada, 2006) and
that the average number of employees of the firms in the sample is 5407, it can be said
that this sample of founder-led Canadian firms represents the population of highly suc-
cessful firms in Canada.
Canada is a large county with diverse geographic regions, so for the sample to be reflec-
tive of the population of firms in the country, the geographic distribution of the sample
must reflect the geographic distribution of Canadian firms. Table 1 compares the geo-
graphic distribution of the firms in the sample to the geographic distribution of business
establishments in Canada (Statistics Canada, 2003) and shows that the two are comparable.
The sample should similarly reflect the distribution of successful firms across indus-
tries in Canada. In Table 2, I compare the distribution of firms across industries in the
sample to that of the Profit 100 list of the fastest growing firms in Canada (ProfitGuide,
2005). For the most part, the distribution of firms across industries is similar. The largest
discrepancy is in the business services category which represents 31% of the Profit 100
firms but only 15% of the firms in the sample. The difference may be the result of differ-
ences in classification methodologies or differences in the types of firms in the sample.
My sample contains large, mature firms in addition to small, high-growth firms where the
Profit 100 sample is focused on the latter. Because the barriers to entry for firms that pro-
vide business services are low, it is not surprising that many of the high growth startups
in the Profit 100 sample participate in that industry. Note also that my sample contains
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IMMIGRANTS AS EXTRAORDINARILY SUCCESSFUL ENTREPRENEURS 31

Table 1. Geographic Distribution of Firms in Sample and in Canada

Province Firms in Sample Firms in Canada
British Columbia 7 (14%) 14%
Alberta 5 (10%) 13%
Manitoba 2 (4%) 3%
Ontario 23 (44%) 36%
Quebec 14 (27%) 22%
Newfoundland & Labrador 1 (2%) 1%
Other provinces and territories 0 11%
Total 52 (101%) 100%

Table 2. Distribution of Firms Across Industries in Sample and Profit100 Sample

Industry Sample Profit 100
Manufacturing 17 (31%) 26%
Business services 8 (15%) 31%
Retail 5 (10%) 3%
Software 4 (8%) 12%
Consumer services 4 (8%) 5%
Natural resources 4 (8%) 0%
Transportation 3 (6%) 0%
Publishing 2 (4%) 3%
Biotech 2 (4%) 0%
Waste management 1 (2%) 0%
Construction 1 (2%) 2%
Entertainment 1 (2%) 1%
Other (5 industries) 0 17%
Total 52 (100%) 100%

firms in the natural resource and transportation industries where the Profit 100 sample
does not.
Measures
Dependent variable: Revenues. I use annual revenues in 2004 as a measure of firm
success that is both reflective of firm performance and objective. The annual revenues of
the firms in the sample ranged from a low of $10 million to a high of over $24 billion.
Where the firm no longer existed in 2004 because it was acquired, the maximum annual
revenues attained during the firm’s lifetime was used in place of the 2004 figures.
Independent variable: Immigrant. Ten of the 52 entrepreneurs were immigrants that
arrived in Canada at age 21 or older. Another two of the entrepreneurs were immigrants
that arrived in Canada at the ages of 5 and 15 and they were coded as non-immigrants
because they didn’t make the decision to immigrate themselves. Of the 10 immigrants
that arrived as adults, four emigrated from the United Kingdom and one each from
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32 DALZIEL

Austria, the Czech Republic, China, Hong Kong, Hungary, and Yugoslavia. All the immi-
grants in the sample arrived in Canada between 1955 and 1985. Immigrant was coded as
0 for people that were born in Canada or that arrived in Canada when they were less than
21 years old, and 1 for people that arrived in Canada as adults. Firms founded and led by
immigrants were predicted to have higher annual revenues than firms founded and led by
non-immigrants.
Control variable: Firm age. I control for firm age because it takes time for a firm to
acquire the resources and capabilities that are associated with high revenues. Firm age was
the age of the firm in 2005 unless the firm was acquired prior to 2005 in which case firm
age was the age of the firm when it was acquired. Two firms were acquired prior to 2005.
Control variable: High-tech. Given the small sample size, I was unable to control for
industry membership and instead controlled for whether or not the firm participated in a
high-technology industry. Firms that participated in the biotechnology, information tech-
nology manufacturing, and software industries were classified as participating in high-
technology industries as were five firms from the business services industry that provid-
ed information and communications technology consulting services and one firm from the
transportation industry that provided fuel cells. The remaining firms were classified as not
participating in high-technology industries. Twenty-nine firms were classified as not high-
tech (coded as 0) and 23 firms as high tech (coded as 1).
Control variable: Previous ventures. Notwithstanding the fact that studies have shown
that serial entrepreneurs do not outperform new entrepreneurs (Westhead and Wright,
1998), I control for the number of previous ventures founded by the entrepreneur.
Control variable: Education. As education is generally a predictor of entrepreneurial
success (Tienda and Raijman, 2004; Saxenian, 1999), I control for the educational attain-
ment of the entrepreneur. Levels of education identified were no secondary school diplo-
ma (coded as 0), secondary school diploma (coded as 1), college or university diploma
(coded as 2), and graduate university diploma (coded as 3).
Results
Table 3 provides the descriptive statistics. Table 4 provides the results. The model is
significantly better than the null model (p < .001). The test of Hypothesis 1 shows that
amongst successful entrepreneurs, immigrants are significantly more successful than non-
immigrants (p < .01). The significance of the control variables is interesting. As expected,
firm age is a significant predictor of firm revenues. Perhaps surprisingly, the high-tech
firms in the sample are not significantly more (or less) successful than the firms that were
not high-tech. Consistent with past research (Westhead and Wright, 1998), serial entre-

Table 3. Descriptive Statistics

Variable Mean S.D. Min Max 1 2 3 4 5
1. Revenues (billions) 1.36 3.76 0.01 24.70
2. Immigrant .19 0 1 .31*
3. Firm age 21.58 12.46 5 57 .39** .02
4. High tech .44 0 1 -.27 .06 -.16
5. Previous ventures 1.44 3.83 0 25 .09 .01 .11 -.20
6. Education 2.04 .84 0 3 -.33* .21 -.14 .52*** .09
*** p < .001; ** p < .01; * p < .05; n=52
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IMMIGRANTS AS EXTRAORDINARILY SUCCESSFUL ENTREPRENEURS 33

Table 4. Results
Standardized ß t statistic
Independent variable
Immigrant 0.38 3.19**
Control variables
Firm age 0.31 2.63*
High tech -0.05 -0.35
Previous ventures 0.08 0.63
Education -0.34 -2.39*
Constant 1.24
Model characteristics
n 52
Adjusted R2 0.31
p value 0.001
** p < .01; * p < .05

preneurs were no more successful than first-time entrepreneurs. Perhaps surprisingly, edu-
cation had a significant negative impact on annual revenues amongst highly successful
entrepreneurs (p < .01). As was indicated in the measures section, only those people who
immigrated to Canada as adults were coded as immigrants. Had I included the two peo-
ple who arrived in Canada as children as immigrants, then the magnitude of the immigrant
predictor would have decreased marginally (to t = 2.73) but the statistical significance
would have remained unchanged (p < .01). Had the eight firms with annual revenues less
than $10 million been included in the analysis, then the magnitude of the immigrant pre-
dictor would have increased marginally (to t = 3.32) and the statistical significance would
have remained unchanged (p < .01).
Discussion
Contributions and Limitations
While some authors point to the problems faced by immigrant entrepreneurs
(Froschauer, 2001; Hiebert, 2002; Jones, 2004), others have provided theoretical support
for the idea that immigrants will perform well as entrepreneurs (Granovetter, 2000; Portes,
1995; Portes and Sensenbrenner, 1993). This study finds empirical support for the hypoth-
esis that amongst highly successful entrepreneurs, immigrants will be more successful than
non-immigrants. The result says nothing about the relative strengths of immigrant and non-
immigrant entrepreneurs in general, only that amongst high successful entrepreneurs—
people who are likely educated and comfortable with the language and customs of the host
country—immigrants are likely to outperform non-immigrants. The result is consistent
with Saxenian’s findings on the participation and success rates of ethnic entrepreneurs in
Silicon Valley (Saxenian, 1999, 2002).
While the empirical test is preliminary, its strength lies in the sample that compares
immigrants to non-immigrants, and in the objective model of entrepreneurial success
based on firm performance. These are features that are missing from most studies of the
performance of immigrant entrepreneurs (Aldrich and Waldinger, 1990). The most serious
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34 DALZIEL

limitation of my work is that while the result shows that amongst successful entrepre-
neurs, immigrants outperform non-immigrants, the data do not allow me to explain why
this is the case. The difference in performance between immigrants and non-immigrants
may be due to the former’s personality traits or their more effective social networks, or
the cause may lie elsewhere. As a consequence, the theoretical explanation of extraordi-
nary entrepreneurial success is supported only insofar as its plausibility is demonstrated.
Implications
Notwithstanding the preliminary nature of the results, the idea that immigrants may be
predisposed towards entrepreneurial success has implications for policy makers. In many
industrialized countries, Canada included, some citizens feel that immigration levels
should be reduced because immigrants take jobs away from people born in the host nation.
While it is no doubt true that there are cases of non-immigrants losing their jobs to immi-
grants, the results of this study suggest that some immigrants may create a disproportion-
ately large number of jobs as a result of their success as entrepreneurs. A more balanced
view of the impact of immigration on employment opportunities in industrialized nations
will offset the opportunity-reducing impact of immigrants competing with non-
immigrants as job seekers, against the opportunity-increasing impact of jobs created by
successful immigrant entrepreneurs.
Inferring proactive policy implications from this study is difficult because the
extremely successful individual, be they an entrepreneur or an athlete, is an inherently rare
creature. Policies that are designed to have a positive effect in most cases are unlikely to
also have a positive effect on the individual who eventually emerges as an extremely suc-
cessful entrepreneur. For example, despite the anecdotal accounts of extremely successful
entrepreneurs dropping out of school, no one advocates leaving school as a route to
becoming an extremely successful entrepreneur. The best that can be done is to design
policies that work in most cases while not placing unnecessarily high barriers in front of
individuals who may later emerge as very positive outliers (Froschauer, 2001; Jones,
2004).
Acknowledgements
I would like to thank the MBA students of the University of Ottawa that participated in data collec-
tion, and Joanne Chami, Barbara Orser, and Allan Riding.

Contact Information
For further information on this article contact:

Margaret Dalziel, Telfer School of Management, University of Ottawa, 55 Laurier Avenue East,
Ottawa ON K1N 6N5

Email: dalziel@telfer.uottawa.ca (best mode of contact)

Telephone: 613-562-5800 ext. 4917

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