Businesses owned by recent immigrants more likely to export to the US and beyond
Ottawa – Canada's diverse pool of immigrants is seen as a source of strength for Canadian firms in expanding into fast-growing emerging markets. A new study from The Conference Board of Canada looking at the experience of Canada's...
Ottawa – Canada’s diverse pool of immigrants is seen as a source of strength for Canadian firms in expanding into fast-growing emerging markets. A new study from The Conference Board of Canada looking at the experience of Canada’s immigrant exporters shows that businesses owned by recent immigrants are more likely, compared to otherwise-similar Canadian businesses, to sell their products and services in countries beyond the United States.
Small and medium-sized enterprises (SMEs) owned by recent immigrants are more likely to export – period – according to Selling Beyond The US: Do Recent Immigrants Advance Canada’s Export Agenda?, published by the Conference Board’s Global Commerce Centre.
“Canada’s trade agenda is focused on opening up markets beyond the United States. Immigrants are often touted as a potential way to boost Canada’s exports beyond the US, but few have looked at the actual experience of Canada’s immigrant exporters,” said Danielle Goldfarb, associate director, Global Commerce Centre.
This analysis examined the actual export experience, performance, strengths and weaknesses of immigrant-owned Canadian businesses compared with other Canadian businesses.
The result is a nuanced snapshot of immigrant exporters: while exporters with a recent immigrant as majority owner earn lower returns on investments in business assets than other Canadian exporters and sell less in dollar value, they are among the fastest-growing Canadian SMEs.
The findings suggest that immigrant ownership may confer advantages in exporting to non-US markets. For example, social ties or language skills may partially compensate for weaknesses in these firms’ business models, such as small company size, limited business inexperience, or weaker research and development (R&D) activity.
This analysis finds that immigrant ownership of Canadian SMEs does not merely strengthen the export orientation of Canadian SMEs. It also enables Canada to develop new or stronger trade linkages beyond the US than would otherwise have been the case. Businesses with immigrant (defined as those who have lived in Canada for five years or less) majority owners are more likely to target non-US markets than businesses owned by other Canadian businesses. Twelve per cent of immigrant-owned businesses export goods and services to markets beyond the US, versus 7% for businesses owned by non-immigrants.
Immigrant-owned businesses that export to non-US markets are also among those Canadian SMEs with the fastest-growing profits. Between 2007 and 2011, profit growth for these firms averaged 21% annually, while profits of non-immigrant exporters declined by an annual average of 2%.
The report, co-authored by Dr. Sui Sui and Dr. Horatio Morgan, both assistant professors, Global Management Studies Department, at the Ted Rogers School of Management, Ryerson University, examined data for more than 15,000 Canadian SMEs to assess the effects of recent immigrant ownership on export market choices compared with Canadian businesses not owned by a recent immigrant.
The Conference Board of Canada will host a live webinar on How to Survive and Thrive in Emerging Markets on June 25, 2014, at 2:00 p.m. EDT.
The Conference Board’s Global Commerce Centre provides evidence-based tools to help companies and governments respond successfully to the trends reshaping the global business environment. The publication is available at www.e-library.ca.