Seven Reasons to Hire Immigrants (+ an exciting announcement)
Firms and co-workers are better off when immigrants are hired. And check out the new deep dives on my website!
Hello Friends,
It’s good to connect with you again, and welcome to all those who’ve signed up recently! I want to share an exciting announcement and then tell you about some cool research on what happens when organizations hire immigrants.
First, the announcement:
You can find the deep dives here. These are some big questions to which you’ll find answers:
Should we favor skilled immigrants or do we also benefit from unskilled immigrants?
How do I approach difficult conversations about immigration?
If any of those deep dives prompt you to read the book, you’ll also find a guide to help you get the most out of your reading.
I hope you find these resources valuable. They aren’t simply based on my opinion. They reflect decades of research, some by me but most by others. My hope is that they’ll help you navigate a topic that’s often talked about, but usually with few facts and little nuance.
Please let me know how I can improve these deep dives, or if there’s another burning questions you’d like me to cover.
Seven Benefits of Hiring Immigrants
Many of my readers — and all of my students — are more interested in business than in policy. They want to know how to make their organizations more capable and profitable. Sometimes they find it strange that a business professor like me does research on immigration, because they don’t think of it as a business-relevant topic.
I beg to differ.
Let me explain why by summarizing seven benefits firms get from hiring foreign-born talent. They’re in no particular order, nor do they represent the full set of reasons firms should hire immigrants. I won’t go into lengthy detail on any one of them. I’ll list each one, briefly summarize the key point, and provide links to some of the underlying research.
Immigrants make firms more innovative. They do so in two ways. First, they bring novel ideas and skills that directly affect the firm’s ability to produce new technologies in the form of patents, products, or processes. This isn’t just about immigrants with PhDs, however. Even so-called “unskilled” immigrants introduce new ways of doing things, such as new cattle ranching practices introduced by Mexican workers. Second, they make *native* workers more innovative by introducing them to new ideas and social networks. In fact, native-born workers become *less* innovative when they unexpectedly lose foreign-born colleagues.
Immigrants fill job/skill shortages that preserve jobs for other workers. Most firms can’t fill all the positions they need with native-born workers. This applies to both blue and white collar jobs. Because many tasks require a minimum number of people (e.g. 5 accountants to complete an audit or 10 construction workers to build a home), even missing out on one or two key (foreign) workers means the entire job has to be put on hold, moved to a foreign country, or not done at all. Immigrants are often the only way to get those key people. Without them, firms cannot invest in growth and thus hire fewer people overall.
Immigrants increase team productivity (up to a point). A recent study in Switzerland showed that team productivity increased steadily as the number of foreign-born members increased in work groups. The highest level of productivity happened when 38% of members were foreigners, after which it declined. This result—especially the 38% figure—may not apply universally, but the study offers an interesting data point.
Immigrants help firms successfully expand into foreign markets. Immigrants are magnets of investment for firms from their home countries. Firms are more likely to expand into foreign locations with large co-national diasporas, and they are more successful when they do so as measured by survival and profits.
Immigrants help firms launch more new products in foreign markets. When firms hire immigrants at their headquarters, they subsequenty launch more new products in the immigrants’ home country. Those products are better adapted to local conditions. This is based on a new paper I’ve been working on.
Immigrants expand the “strategic repertoire” of the firm. When immigrants enter an organization, they bring different ideas, skills, and experiences. As they interact with their coworkers—who themselves have unique ideas, skills, and experiences—the recombination of what newcomers and incumbents bring increases the “repertoire” of what the organization can do. This creates a greater variety of strategic options (i.e. ways to compete) for the firm, as my colleagues and I show in a paper using soccer teams as an example.
Immigrants are especially valuable for startups. For startups, a single key employee with a unique skill or idea can make a major difference—much more than in a larger, more established firm. The flip side is that missing out on that key employee is also much more damaging for a startup than a large firm. That’s why missing out on H-1B workers significantly diminishes startups’ ability to innovate and achieve an IPO.
A big caveat: firms need to have a culture that is welcoming to foreigners. Otherwise, conflict overshadows all of these benefits brought by workers from different backgrounds. But these seven benefits give firms and managers a very good reason to create that kind of culture!
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That’s all for now. Thanks for reading, be well, and spread the word!
Zeke