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PurposeThis study aims to investigate the role of socio‐economic institutions on immigrant effect (IE). The IE is to be empirically tested in two multi‐ethnic societies of the USA and Canada; comparing it in a melting pot and a multicultural approach. This effect is also separately to be examined in several provinces and states, each with its own social setting, in both countries.Design/methodology/approachThe study examines data mainly collected from the census, immigration, and trade/export data in both countries, for the six‐year period of 2000‐2005. The paper compiles data in a panel data format on immigrant groups and trade with the country of origin of 27 (US) and 29 (Canada) immigrant groups.FindingsThe analysis implies findings almost the opposite of what was expected; immigrant effect exists in a melting pot and is not significant in a multicultural society.Research limitations/implicationsThe study is limited to two societies, and still needs to be tested in other multicultural and melting pot countries across the globe.Practical/ implicationsWhile immigrants to Canada identify themselves more strongly with their new home than immigrants to the USA, Canada in general is not fully utilizing their potential in boosting foreign trade with the countries of origin of these immigrants. The paper also addresses some practical implications of the study for managers interested in better exploiting the benefits of immigrant effect.Originality/valueImmigrant effect and its values in two very large immigrant recipient countries with very dissimilar social and institutional settings are systematically investigated. Based on the results of this investigation a number of implications for practitioners and policy makers is suggested.