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Innovation in Immigrant-owned Firms in Canada

This paper uses data from a survey of Canadian firms in 2011, 2014 and 2017, and asks whether immigrant-owned small and medium-sized enterprises (SMEs) were more likely than those owned by Canadian-born individuals to implement an innovation. It is hypothesized that this would be the case since compared to the Canadian born, immigrant entrepreneurs are more likely to be highly educated in a science, technology, engineering and mathematics (STEM) field, are more likely to file patents (at least in the United States), and are more likely to trade internationally. These factors are positively correlated with innovation. The outcome variables include the likelihood of implementing product, process, organizational and marketing innovations, and five types of intellectual property: registered trademarks, patents, registered industrial designs, trade secrets and nondisclosure agreements. The methodology consists of using coarsened pexact matching followed by a probit analysis to control for both firm and owner characteristics. Both adjusted and unadjusted results indicate that an immigrant-owned firm was more likely to implement a product or process innovation, regardless of whether the immigrant owner was a recent or longer-tenured immigrant, or whether the firm was in a knowledge-based industry or the economy as a whole. Similar results were obtained for marketing innovations. There was no difference in the likelihood of implementing an organizational innovation between SMEs with immigrant owners and SMEs with Canadian-born owners. Overall, there was little difference between the two regarding the use of the five types of intellectual property. However, recent immigrant owners were more likely to use patents.