Why Not All Sea-Turtles Become Brokers: The Conflict between Category Membership and Brokerage among Returnee-Firms in China

Abstract

Returnee-entrepreneurs, or nationals from developing countries who start new ventures at home after study or work abroad, appear ideally positioned to act as brokers between developed and developing economies. While this portrayal of returnees is plausible, we have reasons to expect that not all returnees who could become brokers actually do. Specifically, actors face a conflict between actions that help them to establish or maintain their category membership and actions that aim at brokerage. The costs of engaging in brokerage are particularly high for actors whose category membership is insecure. In this paper, using hand-collected qualitative and quantitative data on firms in Shanghai’s semiconductor-design industry, I illustrate this conflict by presenting evidence that for firms established by returnee-entrepreneurs whose identity as domestic firms is insecure, maintaining that identity can conflict with engaging in brokerage by seeking foreign investors. These results imply that institutional factors have an important effect on the ability of returnee-entrepreneurs to act as brokers.