Chapter 7: Patents and Performance: The Case of Immigrant Entrepreneurs in the United States

Researchers have been intrigued about the impact of immigrants on many phenomena, such as wages, taxes, and society in general (Card, 2009). Yet we know little of how immigrants in the United States perceive the patent system, a key mechanism for promoting innovation. This study addresses this gap by examining whether immigrants in the United States value the American patent system, and if so, whether the patent system helps immigrants with the performance of their new firms. Multiple statistical analyses, including t-tests, ANOVA, Cox proportional hazard modeling (survival analysis), and panel data regression are used on a longitudinal dataset, the Kauffman Firm Survey,¹ with six years of data. The results suggest that, when building their own businesses, immigrants use the American patent system more than people born and raised in the United States, thus supporting Hunt and Gauthier- Loiselle (2010) and Peri and Sparber (2011) in the context of immigrants as founders as opposed to employees of a firm. Patents have little effect on the survival and growth of firms founded by immigrants, which is also the case with firms founded by Americans. The findings of the study are important to policymakers, with the results suggesting that the patent system is beneficial in enticing immigrants to start innovative firms in the United States rather than building the firms in their native countries.