Immigrant effects and international business activity: an overview

Abstract

PurposeThis paper aims to examine the myriad linkages between cross‐border migration and international business activity through a conceptual framework of international arbitrage.Design/methodology/approachWhile labour is internationally the least integrated of the various markets (capital, product, labour) the increasing co‐movement of both tasks and workers has created opportunities for the arbitrage and exploitation of differences between national labour markets. Because national labour markets typically display the two characteristics of separation and price discrepancy it is possible to utilise the principle of arbitrage and within this framework examine cost, intellectual, knowledge and employment arbitrage.FindingsThe discussion suggests that international business offers valuable insights into migration processes and effects which have been dominated by the research approaches of other disciplines. It is found that migrants can help reduce transaction costs for bilateral trade, contribute to nostalgic trade, encourage outsourcing and foreign direct investment through referrals and performance signalling, assist country of origin development through remittances and return migration and provide valuable knowledge to their employers in the country of residence.Research limitations/implicationsThe paper is a conceptual one which offers no new empirical results but does provide a context for the interpretation of the more specialised studies that appear in this special issue. There is a need for research on this topic to be firmly grounded in the contemporary context of an increasingly integrated global economy. It also suggests a number of specific areas where further work would be useful.Originality/valueThe key contribution of the paper is in developing a comprehensive conceptual framework – that of labour market arbitrage – which enables a clearer understanding of the complex impacts of international migration on international business activity. It also distinguishes between direct and indirect effects.