Study finds ‘America First’ policy actually spurs minority-owned US firms – UH System Current News

Todd M. Inouye
Todd M. Inouye (Photo credit: Raiatea Arcuri)
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Veterans in Economic Transition Conference, November 19-20 2019

A new study makes a surprising discovery about the “America First” policy and the resulting anti-immigrant backlash taking place in the United States. Assistant professor of management at the University of Hawaiʻi at Hilo Todd M. Inouye and a team of researchers found the policy actually encourages minority entrepreneurs to activate their diaspora networks in order to do more business abroad.

“This results in higher rates of exporting and an increased resiliency in these types of firms, which directly counteracts negativity in the current political and social climate,” says Inouye, who started this fall at the UH Hilo College of Business and Economics.

The study, “Counteracting Globalization’s Skeptics: How Diasporas Influence the Internationalization Preferences of Minority Entrepreneurs’ Firms” in the Global Strategy Journal, is co-authored by Inouye and colleagues Amol M. Joshi, Oregon State University; Iman Hemmatian, California Polytechnic State University and Jeffrey A. Robinson, Rutgers University in New Jersey.

Analyzing more than 20,000 U.S. small businesses, the researchers found evidence that “minority entrepreneurs’ firms prefer to leapfrog into markets, mitigate risks via contractual and bounded commitments, and target countries that are more ethnically and linguistically fractionalized.”

Challenge to ‘America First’ proponents

Thus, the research team finds, diaspora membership actually counteracts skepticism about globalization. “Overall, U.S. minority entrepreneurs’ firms derive 14.4 percent of their revenues from exports, compared to 5.4 percent for other firms. The apparent success of minority entrepreneurs in enhancing U.S. exports challenges the claims made by proponents of ‘America First’ policies regarding the costs and benefits of immigration.”

“Minority entrepreneurs need to know that they can find competitive advantages by embracing their multi-ethnic personal [and] business networks, and there is no need to attend to the negative protectionist rhetoric that at times is present in the popular press,” Inouye says.

The authors write that studies have shown that as export engines, firms founded or owned by minority entrepreneurs, including recent immigrants, generate revenue, create jobs and contribute to growth in vital sectors of the U.S. economy. The authors site a study by the U.S. Minority Business Development Agency that indicates minority entrepreneurs have the cultural insight, linguistic skills and market intelligence to not only excel as U.S. exporters, but to also be strong strategic partners for firms entering global markets for the first time.

The research team recommends “that managers utilize diasporas’ access to resources, knowledge and relationships to reduce their firms’ risks of internationalizing and that policymakers tailor government trade promotion programs to leverage diasporas to reduce transaction costs and increase exports.”

For more see UH Hilo story.