When do return migrants become entrepreneurs? The role of global social networks and institutional distance

Abstract

Research Summary: Does embeddedness in global social networks elevate or diminish individuals' propensity to found new ventures? I analyze entrepreneurial entry among a large, cross-country sample of skilled return migrants, all of whom had worked abroad in the United States before returning to 98 different home countries. My findings reveal that maintaining stronger cross-border social ties-that is, relationships to former colleagues abroad-leads returnees to be more likely to found new ventures in their homelands. However, the positive effects of cross-border social ties diminish with greater institutional distance between the returnee's home country and the United States. The findings have implications for research at the intersection of social networks, international migration, and entrepreneurship. Managerial Summary: When it comes to founding a venture, social networks are often critical in helping prospective entrepreneurs identify new market opportunities and resources. Which types of networks are most beneficial in helping people become entrepreneurs, however, still remains a question. This paper asks whether having social connections to individuals across countries makes one more likely to become an entrepreneur, and if so why? Studyingskilled return migrants, I find that returnees who maintain stronger social ties to those they met while working abroad are more likely to start companies, but only if there is sufficient similarity between the market environments of the

Oh, the places you’ll go: A schema theory perspective on cross-cultural experience and entrepreneurship

“…They cannot explain why some individuals are more likely to launch new ventures or become self-employed, while others do not. Finally, though there is a small yet growing literature on “returnees” (e.g., Bai et al., 2017 ; Liu and Almor, 2016 ; Wang, 2020 ), extant research in this domain typically focuses on entrepreneurial activity in a domestic context by those from a foreign context ( Liu et al., 2010 ). We still lack understanding of how the exposure to foreign countries in-itself fosters entrepreneurial mindsets, regardless of where businesses eventually take root.…”

Cross-border network ties of returnee entrepreneurs and foreign market diversity

“…This desire motives them to be more proactively engaged in identifying international opportunities and making efforts to exploit such opportunities (He et al, 2020). Given that cross-border network ties allow access to foreign market knowledge and information that might not available in home country markets (Wang, 2020), we expect that returnee entrepreneurs with a global mindset are more willing to learn from people in their cross-border networks and more proactively interact with such network members to seek every possible opportunity in foreign markets. This argument is supported by Vanninen et al (2017), who found that individuals with a global mindset tend to more proactively socialize with network members in target markets in order to explore opportunities abroad.…”

“…Second, much of the literature shows that the cross-border network is the main advantage of returnee entrepreneurs compared with local entrepreneurs, and returnees often rely on such networks to acquire diverse resources and knowledge (Dai and Liu, 2009;Liu et al, 2010;Ma et al, 2019;Wang, 2020). Although this research line documents the importance of crossborder networks for firm creation and performance, other work suggests that networks across national boundaries may lose their value (Welch and Welch, 2008), and in fact, returnees encounter difficulties in mobilizing such networks due to institutional distances Cross-border network ties' impacts between host country and home country and decreased regular interactions caused by geographically remote distances (Lin et al, 2019;Prashantham and Dhanaraj, 2010;Pruthi, 2014).…”

“…With the current trend of increasing globalization, a new migrant trend has emergedthat of return migrants. These migrants represent usually highly skilled human capital with advanced overseas knowledge (Saxenian, 2005;Wright et al, 2008) and often consider entrepreneurship as their career choice (Filatotchev et al, 2009;Wang, 2020). Returnee entrepreneurs are those who have received education or professional training abroad and move back to their native countries to begin a new venture (Qin and Estrin, 2015;Qin et al, 2017).…”

Guest editorial New trends in entrepreneurship: a global context

“…The interconnectedness of the global economy and ever-changing technological innovations, on which developed countries no longer hold dominant positions (National Research Council, 2012), has spurred the rise of entrepreneurs globally and leveled the competition field even further. Studies have found cross-border social networks have been the key to the entrepreneurial success of the returnees (Wang, 2020). Such migration of people, markets, technologies and ideas has combined with increasing entrepreneurial activities that undoubtedly shrink the economic or social development gaps of the world.…”