Abstract
Migrants are able to provide firms with knowledge about their country of origin. This can become a valuable source of knowledge for firms in the process of internationalization. Relating to a Knowledge-Based-View perspective, this paper explains how the resource commitment of firms to foreign countries is contingent on immigration from those countries: Immigrants’ country knowledge reduces uncertainty and makes the governance of foreign operations more efficient. Moreover, this paper connects the relevance of knowledge for firm internationalization to institutional characteristics in immigrants’ home and host countries, both of which policymakers can shape. We test predictions on more than 13,000 observations over a 14-year period (2003–2016). The paper identifies economically significant contingencies of a positive effect of immigration, which are robust to changes in model specification, measurement, and sampling. The results indicate how immigration can shape firms’ investments abroad and have implications for developing policy as well as international business theory.
Highlights
International migration has grown rapidly in recent decades, from 173 million migrants in 2000 to 258 million in 2017, which accounts for about 3.4 percent of the world population (United Nations, 2017)
Research demonstrates the economic consequences of international migration for trade (Gould, 1994; Head & Ries, 1998), foreign direct investments (Javorcik, Ozden, Spatareanu, & Neagu, 2011; Kugler & Rapoport, 2007), and international strategic considerations that lead to stronger resource commitments to migrants’
The results provide evidence as to what extent anti-immigrant sentiments influence the economic benefits associated with immigration and under what conditions immigrants’ knowledge creates value for firm internationalization
Summary
International migration has grown rapidly in recent decades, from 173 million migrants in 2000 to 258 million in 2017, which accounts for about 3.4 percent of the world population (United Nations, 2017). Benefitting from immigration home countries (Chung & Enderwick, 2001; Chung & Tung, 2013; Zaheer, Lamin, & Subramani, 2009; Zhao & Hsu, 2007) Those effects stem from, at least partially, a knowledge advantage that immigrants create for firms in the countries that receive them: a firm located where migrants move can use the migrants’ knowledge to reduce knowledge barriers to the markets from which migrants originate. There are still substantial unknowns in the relationship between migration and a firm’s investment decisions It is unclear how migrants’ knowledge can create a knowledge advantage that benefits a firm’s decisions on resource commitment. Theoretical approaches and empirical contributions note that the degree to which knowledge is valuable and applicable to a firm depends on the institutional conditions in which the firm is doing business (Beukel & Zhao, 2018; Cuervo-Cazurra, 2018)
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