STANFORD (Washington Insider Magazine)— A recent study conducted by Stanford University sheds light on the disparities faced by Latino-owned businesses (LOBs) in the United States, particularly those owned by immigrants. Despite their significant contribution to the economy, immigrant-owned businesses encounter more obstacles and earn less than their U.S.-born counterparts.
The study, titled “The State of Latino Entrepreneurship (SOLE) 2023,” highlights the entrepreneurial spirit prevalent among Latino immigrants and their substantial impact on the US economy. Immigrants represent a significant portion of the Latino population in the US, with 52% of all Latino-owned businesses being operated by immigrants, according to the report.
The research conducted by Dr. Maria Rodriguez, the lead researcher, underscores the importance of understanding the distinct challenges confronting immigrant entrepreneurs, particularly those of Latino origin. Dr. Rodriguez emphasizes the significance of recognizing their specific needs and hurdles to foster an all-inclusive environment that optimizes the potential of all entrepreneurs, irrespective of their background.
Key findings from the study reveal stark differences in the economic performance and industry sectors between immigrant-owned businesses and those owned by U.S.-born Latinos. Immigrant LOBs often report lower annual revenues and slower revenue growth rates compared to their U.S.-born counterparts.
According to the report, immigrant-owned businesses have a median annual revenue of $270,000, which is approximately 20% less than businesses owned by U.S.-born Latinos. Furthermore, the study indicates that the generational status of the business owners significantly influences economic outcomes, with subsequent generations experiencing higher revenue levels.
Income growth rates also vary based on the origin of the owners, with immigrant LOBs exhibiting slower growth rates than U.S.-born LOBs. Between 2020 and 2023, immigrant-owned businesses saw a compound annual growth rate (CAGR) of 8.4%, while U.S.-born LOBs recorded a CAGR of 10.1%.
According to lapoliticaonline, despite facing economic challenges, immigrant-owned businesses demonstrate resilience. They are slightly more likely to report profitable operations and maintain similar liquidity levels than non-immigrant-owned businesses.
The study also highlights differences in industry sectors between immigrant-owned businesses and those owned by subsequent generations. Accommodation and food services emerge as the predominant industry for immigrant-owned businesses, while construction and professional/scientific/technical services are more prevalent among U.S.-born LOBs.
As Latino entrepreneurs become more established in the US, their industry preferences evolve. The longer entrepreneurs have been in the country, the less likely they are to operate in accommodation and food services, shifting towards healthcare and social assistance sectors.
The Stanford study underscores the importance of addressing the unique needs of Latino immigrant business owners to foster a more inclusive entrepreneurial ecosystem in the United States.
