Does Social Influence Span Time and Space? Evidence from Indian Returnee Entrepreneurs

Abstract

Research summary We study returnee entrepreneurship through the lens of social influence. Contrary to the conventional view that treats returnee entrepreneurship as discrete decisions by individuals, we examine the transmission of entrepreneurship through important peer networks—university dorm peers and ethnic association networks. We propose enduring effects from peer influence funnelling entrepreneurship entry in distant locations by shaping career aspirations and facilitating resource and information transfer. Using a unique dataset of overseas alumni of a top Indian university, we find strong evidence of the impact of peer influence on the likelihood of returnee entrepreneurship. However, the effect of university peer influence does not extend beyond immediate peer groups in the same cohort. Managerial summary The repatriation of highly skilled migrants has been viewed as important to the supply of entrepreneurial talent in emerging markets. Our study of the overseas alumni of a top Indian university points to the importance of peer influence in determining returnee entrepreneurship. We find that peer ties formed in the early years of university study play a significant role in subsequent career choices and entrepreneurship entry in the home country. We also find co-ethnic professional networks facilitate engagement in returnee entrepreneurship. While policies to encourage returnee entrepreneurship have been geared largely toward promoting formal institutions and economic incentives, our work demonstrates a strong social amplification effect through networks and suggests that peer networks, especially those connecting alumni and ethnic professionals, are important channels to induce returnee entrepreneurship.