Engaging in entrepreneurship as a highly skilled international in Finland – regulatory pumps on the road
HIWE writing series on key results of the project: Part II
In the HIWE-project we have examined the paths and integration of highly skilled internationals to the Finnish labour market. Drawing from interviews, discussions and workshops with internationals and experts, we have learned that entrepreneurship is not always seen as an equally attractive option as paid work for the international talent in Finland.
Challenging to enter the job market
Skilled immigrants and internationals experience challenges in finding employment matching with their qualifications (Shirmohammadi et al., 2019) despite their skills and the need for skilled labour force in many Western countries, including Finland (Larja & Peltonen, 2023). For example, a recent literature review found that the educational credentials, work experience and networks contributed to the successful employment only when those were acquired in the host country. Further, the employers were found to have biases and negative perceptions that led them to discriminate against migrants in their recruitment processes. (Shirmohammadi et al., 2019.)
Consequently, it seems that many employers are not yet quite ready to employ internationals, even if they were well educated. For example, the unemployment rate of highly skilled internationals in Finland is much higher than that of native residents (Integration database, 2024).
What about an entrepreneurial path?
Studies have shown that entrepreneurship is a viable path for employment for immigrants as difficulties in the labour market push them towards self-employment (Abada et al., 2014). Globally, immigrants are more likely to engage in starting up a business than their native counterparts (Morales et al., 2022).
Yet, the situation becomes more complex when we look at the total share of self-employed, which, in fact, is on average lower among working immigrants than among natives in the EU and in the OECD countries. There is also a substantial variation across countries, e.g., in Croatia, Czechia and United States immigrants are much more likely to be self-employed than natives, whereas in Greece, Poland and Japan, self-employment is clearly more common among natives. Finland is in the middle of the pack (OECD/European Commission, 2023.).
Interestingly, there has been a shift in the rates over the past twenty years in Finland: the share of self-employed among native-born has decreased systematically while the trend among foreign-born has been upwards resulting into immigrants surpassing natives in entrepreneurial activity during the past five years (Integration database, 2024). Hence, the share of self-employed with immigrant background in the whole population of self-employed in Finland is constantly rising. Currently, more than every tenth of self-employed has a foreign background (11 %; Integration database, 2024). Among nascent businesses the share is even larger, being is some regions even one third. All this has an impact on the needs and expectations that entrepreneurs set on business service system.
Should immigrants’ entrepreneurship be addressed in policy in Finland?
Entrepreneurship is considered important for economic development across countries as entrepreneurial activity can create competition, demand and jobs (Kressel & Lento, 2012; Burns, 2011; Shane, 2003; Toma et al. 2014). This holds also for immigrant entrepreneurship. Studies indicate that immigrant entrepreneurs in the EU employ others at the same rate, on average, as non-immigrants.
However, in Finland immigrant entrepreneurs are less likely to be employers than their native counterparts. (OECD/European Commission, 2023.). Additionally, in Finland companies owned by immigrants are reported to be smaller in size and less productive than those owned by natives (Maliranta & Nurmi, 2019). Even if many of them are still small, the growth among migrant businesses in Finland equals to the whole Finnish business population (Luomaranta & Niemistä, 2018).
There are many highly skilled immigrant entrepreneurs in Finland who aim to make an impact in the society through their entrepreneurial creativity. This is acknowledged by our interviewee Miguel, who found his route to entrepreneurship through establishing a university spin-off now employing tens of people in Finland:
“And yeah, creating new knowledge, but then ultimately the real impact is when something that you created can be used by other persons. And that’s what I really like, when you can make an impact towards someone else based on your knowledge. […] I made an invention and then […] I became the CTO of the company. And I think we have been quite successful.” (Miguel)
This indicates that well-targeted policy interventions could set Finland in par with other countries in terms of the economic contribution of immigrant entrepreneurship. Entrepreneurial activity can also contribute to individuals’ early access to the labour market to earn some extra income during studies, for example, as explained by Rama:
“I was working at Wolt […] When I moved to Helsinki, I didn’t have any work. At the time, I was [a Master’s student and] doing internship. So, I didn’t have any work. […] expenses for my living, [so] I ended up working there for maybe one and a half years. (Rama)
In addition, entrepreneurship can contribute to a career shift and overall wellbeing of immigrants, as described by Louise about her decision to turn a hobby into a business:
“I was starting to feel like I would really like to have my own company and go for the entrepreneurial adventure. I wanted to do it while I was still young and full of strength. [Chuckles] And so, I felt like then would be a good time. My hobby and my main passion for many years had been around baking.” (Louise)
Furthermore, promotion of immigrant entrepreneurship could contribute to social development in the society, e.g., through advancing inclusive entrepreneurship and diversity by diminishing the gender gap among entrepreneurs. In general, men are more likely to become self-employed than women, but this difference is smaller among immigrant entrepreneurs in the EU (OECD/European Commission, 2023). Moreover, entrepreneurship can potentially advance social integration of an immigrant to a new home country through networking as explained by Emilia:
“[T]here is a really good entrepreneur business atmosphere. There is a lot of events happening. There is a lot of workshops, there is a lot of start-up related events. There’s a lot of networking events. […] So, it has been really interesting to start attending to some of these events because of the people also that I’ve been meeting in them. And through that I have expanded my professional, but also my personal network quite a lot in the last four months.” (Emilia)
What obstacles exist for self-employment among the international talent in Finland?
Theory indicates that entrepreneurship is affected by individual attributes, such as psychological and demographic factors, as well as industry- and institution-level circumstances (Shane, 2003). Interviews and discussions with highly skilled immigrants and national experts in the HIWE project have shown that international talents may face numerous institution-level challenges regarding public control and support at different stages of an entrepreneurial path.
Firstly, rigid rules concerning residence permits reduce entrepreneurial intentions. Requirements for a regular, minimum level of income do not go well together with the uncertainty incurred in starting something new. Furthermore, strict or unclear rules concerning the type of work one can conduct with a single permit may contribute to postponing the realisation of entrepreneurial intentions. This is especially important for those who plan to work simultaneously as employees and entrepreneurs, as explained by Carlos:
“I think that, now that I’m in Finland, those plans are going to take longer to materialise, because I need to learn how things work in Finland for entrepreneurs. […] Like laws on how to, because I have this visa that is a specialist visa, and I need to know what are the limits for [working].” (Carlos)
Once a person decides to take first steps towards entrepreneurship, the bureaucracy hits again. They need to decide between two types of permits for entrepreneurs and the experience is that the application process is slow and cumbersome for the so-called non-start-up permit. There are multiple public bodies involved in the process and according to our national experts the screening and assessment of business potential, based on an application, does not go well together with entrepreneurial risk-taking and experimentation. Even the regional business service providers seem to be lost with the administrative procedures, as one workshop participant describes:
“So, the startup path is really clear and the criteria, all the things are really clear and also you know where to get information. But the entrepreneurship’s residence permit it is totally blank – black. So who is responsible though? Yeah, I know of this ELY-Keskus or this Economy Ministry, but which department, where can we ask questions related to entrepreneurship visas? So what kinds of for example, capital income requirements they have? So we don’t have a contact point there.” (Arto, service provider)
When the business is up and running, the experience is that filing compulsory documents, e.g., regarding taxation, is difficult in English. This may lead into relying on translation help from third persons, potentially causing even quite dramatic hick-ups in the entrepreneurial path, as vividly explained by Bob:
“But the main reason why I shut down the toiminimi was, I asked her [his spouse] to translate the letters from Vero. They’re only in Finnish. She forgot to translate them. So, that was a big problem that led to that crisis.” (Bob)
Further, those interested in developing and growing their business, may not know where to find public support – and this can even be challenging to those working within the service system: in one of our workshops an ambitious entrepreneur wanted to know where they could ask advice for recruiting other international talents, and after a long pause one of the experts eventually recalled that there actually exists a national service desk for international recruitment.
It is not uncommon that career plans change and one wishes to exit the entrepreneurial path, at least for the time being. However, international talents have experienced that it is difficult to get rid of the entrepreneurial status, especially if there is a need for a temporary unemployment benefit, as was for Louise:
“Well, in particular, when I was facing a shift between a status of entrepreneurship to something else or from something else to entrepreneurship, sometimes one situation is not so black or white. And in particular, TE-palvelut requires to give answers that are very much one way or another. Sometimes I have been faced with bouncing information back and forth between me and them, and then requiring a lot of documents. And still, they didn’t get what was exactly my situation. Every time they ask a new question, a delay of about three weeks starts before you even receive the answer. And that also blocks the reception of benefits.” (Louise)
What has been done so far, what about the future of the policy?
Finland has invested a lot in start-ups, and ever since the collapse of Nokia mobile phones in the beginning of the 2010s, the start-up scene in Finland has been deliberately built by the policy-makers and private actors. Consequently, Finland is now known as a start-up friendly country, where public policies are supporting new businesses, average level of education is high and public-private co-operation woks well. (Koskinen, 2021.) This policy emphasis has extended also to immigrants as authorities in Finland have launched a ‘start-up visa’ procedure, guaranteeing a swift access to the country for those meeting the set criteria.
However, entrepreneurship is more than start-ups. Entrepreneurship policy documents (TEM, 2022; VN, 2022) do identify migrant entrepreneurs as a specific group whose needs should be addressed, yet detailed plans and concrete actions have so far been limited (beyond the start-up visa). Furthermore, identifying migrants as a lump group is not enough in the policy development. It is important to target migrants at different stages of their entrepreneurial path: those interested in entrepreneurship, those taking early steps and experimenting, those engaging in part-time entrepreneurship, those aiming at growing their business and those (temporarily) leaving entrepreneurship.
In the HIWE-project we have suggested policy recommendations for concrete actions to target highly skilled immigrants and to address their challenges at different stages of entrepreneurship (you can access the policy briefs here: https://www.hiwe.fi/policyrecommendations/). In the field of entrepreneurship services, it is essential to engage migrant entrepreneurs in designing and developing services that they are using – not only as an act of good will but to ensure more impactful and cost-effective services.
References
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Burns, P. (2011). Entrepreneurship and small business, Palgrave Macmillan, New York.
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Authors
Tommi Pukkinen, University of Turku
Satu Aaltonen, University of Turku
Ulla Hytti, University of Turku
Oskar Aaltonen, University of Turku