As long as they have the education and know-how, minority immigrants don’t face significant barriers to success from within New York City’s technology economy, according to new Cornell research – though challenges for underrepresented minorities and women still exist.
Inequities are likely due to factors outside of the tech ecosystem, such as social disadvantages or educational attainment, according to the research.
“This is the first time it’s been carefully documented that the economic institutions of the tech economy are open access,” said Victor Nee, the Frank and Rosa Rhodes Professor in the Department of Sociology in the College of Arts and Sciences, and co-author of “Immigration, Opportunity and Assimilation in a Technology Economy,” published Sept. 28 in Theory and Society.
“The barriers of entry are high with respect to human capital and social capital,” Nee said, “but once you’re in it, it is an environment that is open and inclusive.”
Nee and his co-author, Lucas Drouhot, Ph.D. ’18, of the Max Planck Institute for the Study of Religious and Ethnic Diversity, surveyed 325 Manhattan and Brooklyn tech firms in 2015 and found that 45% of the CEOs were first- or second-generation immigrants. Exploring factors that might indicate bias – such as funding, company performance and professional networks – the study found few differences between white and nonwhite immigrant entrepreneurs.
Of the CEOs who were first-generation immigrants, 71% were white, but the second-generation immigrant CEOs were more than 51% nonwhite, including 27.5% Asians. There were relatively low numbers of Blacks and Latinos – fewer than 5% in the first generation and around 14% in the second – and of women, who make up around 18% of tech company founders in New York City.
“In technology, the most valuable resource is knowledge and know-how, which is crucial to innovation,” Nee said. “That’s not to say that the tech economy is inclusive of all groups that reside in New York City – it isn’t. These are all college-educated people from professional backgrounds. And not everyone likes to take the risks involved in starting a new firm, when most of them fail.”
Historically, immigrants and people of color have struggled to attain leadership roles in corporations; this is “the institutionalized domain of a white Protestant elite that was difficult for racial minorities to penetrate,” according to the paper. During the emergence of the tech industry in Silicon Valley in the 20th century, Asians who started their own companies tended to do so because they faced a glass ceiling that made it difficult to advance otherwise, previous research has suggested.
But in New York City – where first-generation immigrants make up 37% of the population, and where the local tech industry emerged relatively recently, after the 2008 financial crisis – the researchers found no such obstacles.
Nee said this openness likely stems from the university system, which strives to improve diversity and discourages bias. Ninety-four percent of the CEOs surveyed had bachelor’s degrees or higher.
“The institutional origin of the tech economy is the research university,” Nee said. “It’s not surprising that the students who then form the tech economy bring with them the norms and experiences they had as undergraduates at the research universities of the Northeast, where most tech workers in New York City come from.”
The researchers found little or no significant difference in funding sources, with most entrepreneurs of all backgrounds using personal money or seed investments rather than family donations, or in firm performance, with CEOs across backgrounds succeeding at similar rates. They found the racial composition of business networks constant across groups, with racial composition of networks roughly reflecting the demographics of the industry.
Minority immigrants earned around the same amount as white immigrants or native-born Americans at their previous positions, the study found, an indication that glass ceilings were not the reason they started firms.
The CEOs also all had similar responses to six hypothetical scenarios involving various violations of social norms, such as an entrepreneur frivolously spending seed funding, indicating that beliefs about normal or acceptable professional behavior are shared across immigrant and native-born groups.
The research was partly supported by the John Templeton Foundation.