The regulatory, normative and cultural-cognitive dimensions of the returnee opportunity and returnee liability: How institutional migration creates the two sides of the same coin

The concept of transnational entrepreneurship (TE) has attracted much attention in scholarly literature in recent times. Transnational entrepreneurs have a bifocal orientation and maintain business and personal relationships in two different geographical spaces spanning across national borders (i.e. in their home and host countries) while running their enterprises. Returnee entrepreneurship (RE) deals with entrepreneurs who establish enterprises in their home countries on returning from host countries after having gained educational or business experience. While TE is a first step towards international entrepreneurship (IE), ethnic entrepreneurship (EE) is another facet that links TE and returnee entrepreneurship (RE) through the facilitating role played by the diaspora community comprising immigrants from the home country. This chapter provides an overview of the research on TE, RE and ethnic entrepreneurship and explains how they are facilitated by the diaspora of the new generation of opportunity and capability-based immigrants. It further provides an overview of the different theories about SME internationalization with special reference to transnational and returnee entrepreneurs. The concluding part of this chapter explains the role played by different factors such as market/political conditions, technological developments, production networks, social networks and human capital in facilitating or posing challenges to the internationalization process of SMEs, especially of TEs and REs.

PurposeThe purpose of this paper is to investigate the phenomenon of returnee entrepreneurs, their venturing efforts and the impact of the institutional environment they operate in, and thereby to propose a conceptual model depicting how returnee entrepreneurs create and operate new ventures and interact with the institutional environment.Design/methodology/approachThis study followed a multiple case study approach based on data collected from in-depth inquiries into 11 returnee entrepreneurs and their ventures in China which was analysed inductively.FindingsAnalysis of case study data resulted in a conceptual model of returnee entrepreneurs illustrating micro-level characteristics of the phenomenon and the interplay with the institutional environment of an emerging economy. Insights from the case study are discussed in terms of implications for entrepreneurial motivations, human and social capital, estrangement from the home country, internationalisation behaviour and objectives of returnee-owned ventures.Originality/valuePrevious research on the phenomenon of returnee entrepreneurs is highly fragmented and has largely focussed on specific and isolated outcomes. This study offers a holistic inquiry contributing to a better understanding of the phenomenon as a whole and presenting key properties of the phenomenon.

Social ties and venture creation by returnee entrepreneurs

Returnee entrepreneurs are unique actors spanning between different environments. When coming back to their home countries to start new ventures, they inevitably face challenges in reconciling different logics from their home and host countries. The interplay of these different logics creates institutional complexity. This paper examines the interplay of multiple logics induced from home and host countries and the entrepreneurs’ responses to this situation. Multiple in-depth interviews with returnee entrepreneurs in the information technology industry in Vietnam have revealed that the entrepreneurs configure market and innovation logics among three sets of practices, including product/market, internal capacity, and reactions to institutional constraints. Four strategic responses to institutional complexity, namely non-learner, adaptor, camouflager, and innovator were also identified. Furthermore, this study finds the entrepreneurs’ strategic responses and their active influence on local institutions upon their return. Relevant implications and recommendations are also discussed.

The micro-foundations of the returnee liability: The interpersonal challenges of returnee entrepreneurs in Kenya

Returnee entrepreneurs (REs), who left China for education or work experience, accumulate human capital (HC) from their host countries. Such HC may be of benefit when forming new firms on their return to their home country. Insight from an in-depth case study of a service company for legal professionals, formed by three REs in Shanghai, is observed. Data were collected through participant observation and in-depth interviews. Findings indicate a contingency effect of HC. REs’ specific human capital (SHC), leveraged from their ‘host country experiences’, increased their alertness to business opportunities (i.e., opportunity identification). Their general human capital (GHC), leveraged from their ‘home and host country experiences’, prompted the new firm formation (i.e., opportunity exploitation).

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 I ndian 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.

Returnees—nationals of a developing country who have studied or worked in a developed economy and later returned to their home countries—appear ideally positioned to start new ventures. Yet a growing body of research suggests that they perform no better—or even worse—than home-grown entrepreneurs, a phenomenon we refer to as “returnee liability.” While previous research has sought the solution to this puzzle in institutional conditions in returnees’ home countries, the key contribution of this paper is to propose a novel mechanism that accounts for returnee liability; namely, returnees’ lack of social networks in the regions where they start their new ventures. To provide evidence for this mechanism, we explore how a returnee entrepreneur’s and her top management team’s local social capital affects her venture’s performance. Using a unique, hand-coded dataset on Chinese high-technology firms, we find that ventures established by returnee entrepreneurs with more school ties in the region where the new ventures are located are less disadvantaged, relative to those founded by home-grown entrepreneurs, than those founded by returnees who have fewer school ties there. We also find that returnee entrepreneurs who lack local school ties can benefit from the local school ties of their top management team members, but only if these members have an equity stake in the venture. These findings expand our understanding of returnee entrepreneurs and provide important new evidence for the role of social networks in creating new ventures.

Returnee entrepreneurs and the performance implications of political and business relationships under institutional uncertainty

The purpose of this paper is threefold. First, we argue that the consolidating phenomenon of returnee entrepreneurship constitutes an increasingly important type of emergent entrepreneurship whereby entrepreneurs leverage latent opportunities and knowledge spillover matured abroad, and subsequently exploit them when they return to their home country. Second, based on empirical evidence from the Chinese context, we provide empirical evidence that returnee entrepreneurship itself represents a catalyst for emergent entrepreneurship, as it can encourage other local entrepreneurs to identify latent opportunities that were not exploited by returnee entrepreneurs. Third, we provide a framework illustrating how returnee entrepreneurship, as a form of emergent entrepreneurship, unfolds in time and space by developing a time/space matrix that can explain the origination of emergent returnee-induced entrepreneurship (ERIE), taking into account also the impact of institutional conditions on talent mobility. Our findings bear important theoretical and practical implications for emergent and returnee entrepreneurship.

Returnee entrepreneur (RE) businesses have extensively contributed to economies around the world. However, REs ability to galvanise and coordinate local business networks and permeate the international markets within countries in Sub-Saharan Africa (SSA) have mostly been overlooked, particularly in the context of exporting activities in Africa. This paper posits that diaspora 'returnee entrepreneurs' can become potent channels for the promotion and facilitation of the internationalisation of small and medium enterprises (SMEs) in developing economies. An original piece of empirical research on two exporting food processing clusters in Ghana shows that REs can introduce external technology, develop and sustain international customer networks and are able to meet international standards, thus becoming carriers for internationalisation from the onset. African returnees are able to build trust-based relationships within home country formal business structures and establish strong ties with international customers that accommodate operational and institutional bottlenecks.

Forgotten or not? Home country embeddedness and returnee entrepreneurship

Improved market opportunities in China and government-led policies entice talent away from their host countries to return to their home country. We study Returnee Entrepreneurs (REs) in the high-tech sector and use network theory to probe their social ties enabling new firm formation. Data collection rested on a comparative case study using in-depth interviews with 10 REs. Analysis indicates that direct entrant REs (i.e., those who formed a firm immediately upon return) relied on their strong ties with family and friends, while abroad, to substitute weak ties with the government to access resources for new firm formation prior to their return. Indirect REs (i.e., those who sought employment prior to forming a new firm) validated their idea through strong education ties while abroad but did not exploit strong family ties at home because they provided little leverage to resource providers.

PurposeThis paper aims to reveal the influencing mechanism of the interaction between institutional environments in the home and host country on the accelerated internationalization of entrepreneurial enterprises from emerging economies (EE). The authors want to open the black box of home-country institutional environments’ moderating mechanism on the relationship between host-country institutional environments and accelerated internationalization.Design/methodology/approachThe authors chose a massive interview method and case study method to answer this question. According to our standards, the authors chose four high-tech companies in Guangdong and Guangxi provinces as case study samples. During investigation in the four case companies, the authors collected print data of 150 pages and electric data of 3 pages. Then, the authors excavated concepts in data through open coding, axial coding and select-type coding and identified concepts’ dimensions and connections between them.FindingsWell-developed home-country institutions can reduce the inhibitory effect of under-developed host-country institutions on the accelerated internationalization of entrepreneurial enterprises from emerging economies. Under-developed institutional environments in the home country are beneficial for entrepreneurial enterprises from EE to develop the institutional capability for entrepreneurial enterprises with stronger institutional capability from emerging economies. The inhibitory effect of under-developed institutional environments in the host country on their accelerated internationalization is weaker. The positive moderating role played by institutional voids in the home country on the relationship between institutional voids in the host country and the accelerated internationalization are mediated by the institutional capability of entrepreneurial enterprises from emerging economies.Research limitations/implicationsThe authors just refined the definition of institutional capability and divided its dimensions. Issues such as operationalization of institutional capability and the development of measurement scale are also worthy for future quantitative research. Considering the inherent defect of case study and that these four case companies are from Chinese high-tech industry, the external validity our research may be limited. The theoretical model that was constructed generally captured the relationships between dual institutional environments, institutional capability and EE entrepreneurial firms’ accelerated internationalization decision. Future studies may use a large-scale sample to verify the all propositions the authors introduced to draw more steady and reliable empirical study results.Practical implicationsThe conclusions have significant implications for governments in EE to construct friendly institutional environments for international entrepreneurship and for entrepreneurial firms to implement internationalization strategies.Social implicationsPolicy makers should establish well-developed normative and cognitive institutional environment by cultivating global-orientated and open national culture and organizing experience exchange conference, thereby speeding up the implementation of internationalization strategies and further improving international competitiveness for a country.Originality/valueFirst, the authors defined institutional capability as firms’ ability of establishing relationships with institution actors, adapting to institutional contexts, changing existing institutions or creating new ones to gain potential interests and suggested that it consists of three dimensions. Second, institutional voids in the home country positively moderate the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE. At last, institutional capability of firms negatively moderates the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE.

Recontextualising knowledge is the key to effective knowledge transfer across different business contexts. While knowledge recontextualization has been explored in intra-firm knowledge transfer within multinational enterprises, few studies have extended the concept of knowledge recontextualization to returnee mobility - an effective international knowledge transfer mechanism by returnee entrepreneurs. Using our own surveyed data of 91 Vietnamese returnee entrepreneurs, this study examines under what institutional conditions and individual characteristics returnee entrepreneurs can successfully recontextualize brought back international knowledge and enhance firm performance when operating in their home country. We found that the transfer of tacit knowledge plays an important mediating role to achieve the effective knowledge recontextualization. Keeping home embeddedness while living aboard is critical to help returnees fit back to home country while too much or too little host embeddedness can harm their knowledge recontextualization back to home market.