Study finds “America First” policy results in expansion of minority-owned U.S. firms
UH Hilo Assistant Professor of Management Todd Inouye and a team of researchers find the “America First” policy actually encourages minority entrepreneurs to expand through activating their diaspora networks in order to do more business abroad.
An assistant professor of management at the University of Hawai‘i at Hilo has coauthored a new study that makes a surprising discovery about “America First” policy and the resulting anti-immigrant backlash taking place in the United States.
Todd M. Inouye and a team of researchers find 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 arrived this semester 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” (Global Strategy Journal, Oct. 23, 2019), 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 over 20,000 U.S. small businesses, the researchers find 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.”
Thus, the research team finds, diaspora membership actually counteracts skepticism about globalization. “Overall, U.S. minority entrepreneurs’ firms derive 14.4% of their revenues from exports, compared to 5.4% 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.”
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.”
Inouye’s research interests include examining how contextual boundary conditions like diversity, gender, or public policy affect the strategies of small business managers and owners.
“My work in management diversity research is very relevant to our nation which is a nation of diasporas—unless one is Native Hawaiian or Native American—as well as our state which has no ethnic majority,” Inouye explains.
“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,” he says.
Learn more about Todd Inouye’s research
Story by Susan Enright, a public information specialist for the Office of the Chancellor and editor of UH Hilo Stories. She received her bachelor of arts in English and certificate in women’s studies from UH Hilo.