DIASPORA
BUSINESS
Edited by: Maria Elo AND Liesl Riddle
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INTER-DISCIPLINARY.NET
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Diaspora Business
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Inter-Disciplinary Press
Edited by
Maria Elo and Liesl Riddle
Inter-Disciplinary Press
Oxford, United Kingdom
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Diaspora Business
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Introduction: Diaspora Business
Maria Elo and Liesl Riddle
Part I
Diaspora Business, Investment and Trade
Tracing the History of Diaspora Business
Ram S. Vemuri
Part II
vii
3
Understanding Diaspora Investments
Maria Elo and Liesl Riddle
13
The Role of Diasporas in the Growth and Internationalisation of
Businesses in Countries of Origin
Indianna Minto-Coy
29
Diaspora Entrepreneurship and Internationalization
Transnational Entrepreneurship and Opportunity Recognition
Arnim Decker
47
Classification of Diaspora Entrepreneurship
Aki Harima
59
Diaspora, Civil Society Actors and Emerging Market Entry
Mohammad Rana and Maria Elo
73
Part III Diaspora Networks, Roles and Social Capital
The Impact of Social and Cultural Capital on Jewish
Entrepreneurship Business Activities in Shanghai
Erez Katz Volovelsky
87
Diasporans as Target Market- Service Innovations for
Final Repatriation
Maria Elo and Victor Mollel
99
Analysing the Low Rate of Self-Employment among Migrants
in the Rebublic of Ireland and Northern Ireland: The Social
Capital of Self-Employed Migrants
Steven Lucas
113
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Table of Contents
Diaspora Frameworks, Institutions, and Policy Making
Gains from Diaspora’s Brain: The Complexity of Successful
Migration Policy
Iris Koleša and Andreja Jakli
Wrong-Headed Assumptions, Unintended Outcomes: The Case
\151
of a Migrant Business Support Scheme in Israel
Sibylle Heilbrunn and Ivan Diego Rodriguez
129
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Part IV
Maria Elo and Liesl Riddle
The number of people living and working away from their places of origin is
rising, which is making diasporas even more vital actors in the world economy and
business. Cross-border migration has become a mega-trend of a globalizing
economy, in fact, Gheasi, Nijkamp and Rietveld speak about an ‘age of
migration’.1 The interconnectedness and mobility of people and countries is rapidly
changing during the last decades. Moreover, economic crises, wars and climatic
changes significantly influence and push the growth of migration and diasporic
populations. On the other hand, opportunities and economic growth pull migrants
and foster diaspora development. The societal debate on the impact of migrants
becomes heated when their numbers raise, for example, due to refugee crises. In
the OECD countries the share of foreign-born people is steadily increasing.
Interestingly, the share of foreign-born people was highest in Australia, Canada,
Israel, Luxembourg, New Zealand and Switzerland, which illustrates not only the
economic potential of these markets, but also its interconnection to diaspora and its
effects.2 The business potential of diasporas and the role of diasporas as actors in
the global economic landscape presents a new stream of interest in research,3
taking the viewpoint away from the simple factor condition- dimension of diaspora
as merely a labor and production factor. The importance of diasporas’ ‘brain’ and
talent has been well acknowledged in the research literature on brain drain, gain,
and circulation, as well as in economic development and international
competitiveness of regions and countries.4 Migration and diasporas shape
economic activity-scapes, ways of doing business and our societies world-wide.
The current massive waves of migrants require particular research attention in
order to provide research supporting home and host countries in terms of
integration, economic development, prosperity and poverty reduction, resource and
infrastructure development, and secure societies.
The conversation on the deficit and problem aspects of the diaspora impact on
economy and society is often biased and one-sided.5 The deficit view in research
needs to be complemented with a solution-oriented discussion as migrants and
diasporans enrich labour markets, entrepreneurship, investment and innovation
bringing also a positive impetus for economies. This book aims to enhance these
positive aspects of the phenomenon. According to International Migration Outlook
2013, one can be confident that, with the growing focus on skilled labour migration
during the past two decades, recent immigrants are more likely to be net fiscal
contributors than preceding waves of migrants.6 Therefore, we consider it vital to
address diaspora and diasporas’ use of capabilities, resources, and networks in both
home and host-country context and beyond, as well as their visible and invisible
interconnectedness linking marketplaces and ideas.
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Introduction
Introduction
__________________________________________________________________
The 1st Global meeting on Diaspora Business in July 2015 in Oxford was an
attempt to bring together scholars researching diaspora, business, economy and
entrepreneurship from different parts of the world and across disciplines to explore
and examine the phenomenon of diaspora business. This event opened up
discussions embracing numerous aspects of business and economy covering a
number of areas in several contexts. This ebook is the result of these discussions,
papers and presentations.
The primary purpose of this book is to transmit this interdisciplinary scholarly
discussion to the reader. The idea behind the conference and this book was to
explore and discuss the question how diaspora influences the business and
participates as an actor in this global business landscape. The book called for new
views of diaspora business including: Concepts, importance and the inherent
dilemmas posed by the activities of diaspora businesses; the socio-cultural
mechanisms underpinning these activities; the different types of diaspora
entrepreneurship; the organisational structures of diaspora businesses; the
numerous influences and contributions to changes in societies including the
political machineries of all echelons of government; and the subsequent challenges
for managing diversity of businesses and the government policies related to the
existence of formal and informal diaspora businesses. With its individual chapters
the book contributes to particular discussions, but as such it also serves as the
discussion platform that connects the work that has been carried out in the
Diaspora Networks in International Business-project at Turku School of
Economics in Finland, in the University of Bremen developing Diaspora
Entrepreneurship teaching, in the Diaspora Program at The George Washington
University, in combination with the research tradition of the Inter-disciplinary.net
and the efforts of Ram Vemuri of Charles Darwin University, Australia. On behalf
of the organizing team and the editors, we would like to cordially thank the
reviewers and contributors of the above-mentioned events and this book.
Contents of the book:
The book is divided into four parts, each exploring a particular aspect of
diaspora and business. The chapters provide a broad and diversified view to
diaspora business presenting numerous views and disciplinary perspectives. All
chapters –individually and together- facilitate and advance the dialogue on the role
and impact of diaspora in economy and business.
Part 1: Diaspora Business, Investment and Trade
The first part starts with the concept of diaspora business and what it means.
Ram Vemuri addresses the long existence of diaspora businesses in the context of
India. He illustrates how mobility and diaspora can foster betterment and business
generation through entrepreneurship in a socio-economic context that has rigid
frames and impediments. His study, Tracing the History of Diaspora Business,
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viii
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illustrates the multiplicity of the roles that the context and time have in this
economic catching-up. This provides a unique view to better understand the
contemporary mobility and economic success of the Indian diasporans, thus
contributing to the Indian diaspora business research.
The part continues with a discussion on the conceptual side addressing
investments, diaspora and economic development. Maria Elo and Liesl Riddle
reframe the conversation about diaspora investment and offer a more granular
conceptualization of the phenomenon which points out the heterogeneous nature of
diaspora investment in terms of forms, destination, initiation and purpose.
Particular attention is given to the investor concept from individual to a bounded
group of actors, and forms such as diaspora portfolio investments (DPI) and
diaspora direct investments (DDI), but also diaspora family investments and firms.
They contribute to diaspora investment theory with an analytical typology for
deconstruction.
Indianna Minto-Coy brings up the important role of diaspora in international
trade and internationalisation in her study. She discusses and conceptualises the
roles that diasporas play in the global trade, initiating and triggering new and
extant trade flows between countries, particularly between home and host
countries, but also between the diaspora locations. Her chapter illustrates diasporas
as business actors that influence the growth and internationalisation of businesses
from countries of origin. The useful role of diasporas is specifically relevant for
firms from small and developing nations who face difficulties to internationalise
and access new markets.
Part 2: Diaspora Entrepreneurship and Internationalization
Entrepreneurship and entrepreneurial activities are an underlying interest in
many of these chapters. Arnim Decker provides a perspective on the resources that
the transnational character of an entrepreneur provides and points out the
importance of the entrepreneur. His study analyses the development and
internationalization of a firm established by a transnational diaspora entrepreneur
and how this transnationalism influences the venture. The study is theoretically
constructed on the resource based perspective, but it employs also aspects of social
capital, network structures and structural voids. He presents a case of a company
with Romanian ‘origin’ which internationalizes differently than described in the
classic Uppsala model.7
The discussion on entrepreneurial motivation of diasporans continues in Aki
Harima’s chapter addressing the drivers and motivations of people to start as
diaspora entrepreneurs and how different these flows of entrepreneurs are in terms
of country settings. She discusses the extant types of diaspora entrepreneurs and
established an alternative classification of four types of diaspora entrepreneurship:
Ascending diaspora entrepreneurship, descending diaspora entrepreneurship,
horizontal diaspora entrepreneurship and returnee entrepreneurship. She highlights
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Maria Elo and Liesl Riddle
Introduction
__________________________________________________________________
difficulties of analysis in approaching the various diaspora entrepreneurships due
to their heterogeneity.
Diaspora entrepreneurs fascinated in their ability to address opportunities and
connect markets, but also how they can drive internationalization of multinational
enterprises and change emerging markets. In their study Mohammad Rana and
Maria Elo investigated this and focus on the role of diaspora and civil society in
bringing an innovative business model to serve the Bangladeshi markets as an
international joint venture with multinational enterprises. They describe the
essential role of the transnational diaspora, their relations with the local civil
society actors and how these in combination made it possible to create the
Grameenphone company in a previously non-extant rural telecom market. The case
study illustrates how critical the role of the establisher-entrepreneurs was in
convincing the partners to participate and invest in an emerging market like
Bangladesh.
Part 3: Diaspora Networks, Roles and Social Capital
As previously noted, the roles of the diaspora and the individuals in diaspora
are multifaceted and embedded in socio-cultural and religious settings. Erez Katz
Volovelsky analyses and illustrates the development of Jewish entrepreneurial
diaspora in Shanghai, China. He presents how the Jewish practices are intertwined
with entrepreneurial and business activities, and points out that these diaspora
entrepreneurs live and operate in a distinct social and cultural environment that
forms and influences their social and cultural capital. This Jewish social and
cultural capital is employed not only for employment, connecting entrepreneurs,
and for business opportunities but also for maintaining traditions and cultural
institutions. He discusses the role of the Chabad centers, as organizations among
other, in providing the structures for these capitals to evolve.
Social and cultural preferences and traditions make diasporans special
customers and potential target groups, even overseas. Maria Elo and Victor Mollel
investigate the phenomenon of final repatriation and the business models that have
evolved around it to serve diasporas. They present three cases that incorporate
various service innovations and cultural adaptations in serving diasporas in home
and host country contexts. The study highlights the nature of final repatriation,
being also a collective event, and the particularities of diaspora customers and their
behaviour. They propose that diasporans have diasporic loadedness as customers
and therefore act differently as customers, being more receptive for heritage related
service innovations and their co-development.
Social capital can also be used as the lens to approach self-employment. Steven
Lucas analyses the reasons behind the low rate of self-employment among
migrants the Republic of Ireland and Northern Ireland and addresses their social
capital as an explanatory element. He goes beyond mixed embeddedness and
structural views and presents findings that point out that the crucial challenge for
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many is the initial lack of contacts. The study also emphasises the importance of
networking and developing contacts in a successful way to serve the business
interests.
Part 4: Diaspora Frameworks, Institutions, and Policy Making
The discussion on diaspora resources in the form of talent and brain is an
inevitable part of the macro-level understanding of diasporas and their dynamic
flows. Brain drain and the respective brain gain is a particularly urgent concern in
many countries, especially small countries. Thus, the regulating policies and
strategies are of particular interest. Iris Koleša and Andr
migration strategies of four small countries of origin, Austria, Estonia, Ireland and
Slovenia. Their cross-country comparative study examines ways how smaller
countries of origin can apply emigrant human capital for their economic
development. Their findings emphasise the importance of perceptions,
communication, network structure and content in addressing strategies and policies
for international migration.
Country-level policies and regulations are central in allowing the phenomenon
of diaspora business to take place and evolve, and more importantly those regional
and local level programs that target particular diasporas have become modern
instruments for governing diasporas and their inherent resource and potential
utilisation. Sibylle Heilbrunn and Ivan Diego Rodriguez analyse an Israeli public
program targeted to train local Ethiopian unemployed academics as mentors for
Ethiopian small business owners. Ethiopian diaspora in Israel is considered
weakened and marginalized and this analysis of implementing a niche
entrepreneurship fostering program illustrates the difficulties and failures that this
program encountered. They point out several shortcomings, such as lack of
intercultural sensitivity, reproduction of social inequality and lack of functioning
involvement of the stakeholders. Their study underlines the meaning of the wrongheaded assumptions originating already from the planning of the program.
The discussions, presentations and findings of these authors contribute to a
better understanding of the dynamics, dimensions and features of the diaspora
business phenomenon. At the same time, they underline the need to conceptualize,
contextualize and increase the research on diaspora business. They identify and
point out real-world problems due to limited knowledge, failed approaches and
underutilized resources in several cases and multiple aspects of business,
management and governance. The plurality and empirical depth of the chapters in
this eBook are notable and show how many aspects of diaspora and business there
are, and how these resources could be managed and employed for betterment by
increasing the understanding of diaspora business. One of the between-the-lines
messages is that the analytical levels and viewpoints need to be more emphasised,
since diasporans can be approached as change agents and entrepreneurs active in
business not just economic production factors from a viewpoint of corporations or
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Maria Elo and Liesl Riddle
Introduction
__________________________________________________________________
nation states. In addition, it becomes clear, that a single sending or receiving
country view does not explain the dynamics of diaspora business activities in its
entirety.
One of this domain’s challenges is its terminology combined with disciplinary
settings that do not always foster common understanding and leave the potential of
‘cross-silo’ understanding often untapped. Therefore, this book attempts to
embrace the idea of migration and diaspora in business as an overarching lens that
enables a more phenomenon-driven understanding across disciplines and research
streams. An updated theoretical positioning as a robust ‘hybrid’ field of research
would increase the academic acceptance of diaspora business research.
Future research in this area is needed, for example, it can follow many avenues
of inquiry focusing on dynamics, mechanisms, patterns and processes, but it could
also incorporate issues such as the agency of diaspora, its drivers and motivations
in business, and explore its potential from dyadic and triadic perspectives, and
employ multilevel-analysis and multiple contextual foci. There is also a need to
produce instrumental, descriptive and explorative qualitative research that present
narrative cases, particularly on success and failure to increase learning to explain
unique workings of diaspora entrepreneurs and businesses. Moreover, the research
sector should also consider diaspora entrepreneurs and businesses as users and
customers of their research findings, in addition to policy makers and academic
scholars. Corporations and nation states will also require support for articulating
better strategies and policies for future promotion of a rising diaspora business
globally.
Notes
1
Peter Nijkamp, Masood Gheasi, and Piet Rietveld, ‘Migrants and International
Economic Linkages: A Meta-Overview.’ Spatial Economic Analysis 6.4 (2011):
359-376.
2
OECD (2014), ‘Migration’, in Society at a Glance 2014: OECD Social Indicators,
OECD Publishing, 3. Notice that these countries also have small populations.
3
Maria Elo, ’Diaspora Networks in International Business: A Review on an
Emerging Stream of Research’, Handbook on International Alliance and Network
Research, eds. Larimo, Jorma, Niina Nummela and Tuija Mainela (Cheltenham:
Edward Elgar Publishing, 2015), 13-41.
4
Liesl Riddle, George A. Hrivnak, and Tjai M. Nielsen, ‘Transnational Diaspora
Entrepreneurship in Emerging Markets: Bridging Institutional Divides,’ Journal of
International Management 16.4 (2010): 398-411; Jennifer M. Brinkerhoff, Digital
Diasporas: Identity and Transnational Engagement (Cambridge: Cambridge
University Press, 2009), Rosalie L. Tung, ‘Brain Circulation, Diaspora, and
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xiii
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International Competitiveness. European Management Journal 26.5 (2008): 298304.
5
Nijkamp, Gheasi, and Rietveld, ‘Migrants and International Economic Linkages’,
359-376.
6
OECD, ‘International Migration Outlook 2013’, OECD Publishing, 12.
7
Johan Johanson and Jan-Erik Vahlne, ‘The Internationalization Process of the
Firm: A Model of Knowledge Development and Increasing Foreign Market
Commitments’, Journal of International Business Studies 8.1 (1977): 23-32.
Bibliography
Brinkerhoff, Jennifer M. Digital Diasporas: Identity and Transnational
Engagement. Cambridge: Cambridge University Press, 2009.
Elo, Maria, ’Diaspora Networks in International Business: A Review on an
Emerging Stream of Research’.Handbook on International Alliance and Network
Research, edited by Larimo, Jorma, Niina Nummela and Tuija Mainela 13-41.
Cheltenham: Edward Elgar Publishing, 2015.
Johanson, Johan and Jan-Erik Vahlne, ‘The Internationalization Process of the
Firm: A Model of Knowledge Development and Increasing Foreign Market
Commitments’, Journal of International Business Studies 8.1 (1977): 23-32.
Nijkamp, Peter, Masood Gheasi, and Piet Rietveld. ‘Migrants and International
Economic Linkages: A Meta-Overview.’ Spatial Economic Analysis 6.4 (2011):
359-376.
OECD (2013). International Migration Outlook 2013, OECD Publishing.
OECD (2014), ‘Migration’. Society at a Glance 2014: OECD Social Indicators,
OECD Publishing.
Riddle, Liesl, George A. Hrivnak, and Tjai M. Nielsen. ‘Transnational Diaspora
Entrepreneurship in Emerging Markets: Bridging Institutional Divides.’ Journal of
International Management 16.4 (2010): 398-411.
Tung, Rosalie L. ‘Brain Circulation, Diaspora, and International Competitiveness.’
European Management Journal 26.5 (2008): 298-304.
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Maria Elo and Liesl Riddle
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Diaspora Business, Investment and Trade
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Part I
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S. Ram Vemuri
Abstract
Contemporary discussions of diaspora business do not acknowledge the simple
historical fact that neither movement of people nor formations of businesses due to
migrations are new phenomena. This presentation traces the significance of
migration and the impact of migration on the formation of business in order to
contextualize the contemporary phenomenon of diaspora business. The chapter
draws from the trends in internal migration and formation of businesses by
migrants using India as a case analysis. Based on the analysis of Indian internal
migrant populations and business formations, the chapter suggests the need to
escape the perception of diaspora business as being a new event. The chapter will
conclude with a call for setting up a research project on a global scale to develop
an interdisciplinary theoretical model to understand the formation and development
of Diaspora business.
Key Words: History of Migration, Business formations of migrants, Diasporas,
Business Features, Indian International and Internal migrations, Indian diaspora,
Indian diaspora Businesses.
*****
1. Diaspora Business
Let me begin this chapter with a prevailing view about diaspora Business which
I believe will provide a perspective for the reminder of the chapter. It is a view
held by many reviewers of established International and Transnational Business
journals that there is no such thing as diaspora Business.1 At best, what currently
exists in relation to immigration and entrepreneurship is recognition of immigrant
entrepreneurship. Even there, the research on immigrant entrepreneurship ‘has
been dominated by social scientists, who show a great deal of interest in
ethnocultural characteristics and processes of ethnocultural incorporation. In so
doing, they reduce immigrant entrepreneurship to an ethnocultural phenomenon
existing within an economic and institutional vacuum’.2 The concern of this
chapter is with the denial of existence of diaspora Business and the vacuum
surrounding its idea in contemporary business discussions.
There are three reasons for my concern. First, there is an urgent need for
considering a new organisational skin as a result of inherent ingenuity,
inventiveness and imagination exhibited by migratory populations in the
contemporary world as they respond to the four disruptive forces identified by
Dobbs, Manyika and Woetzel (2015).3 They are (1) rapid increases in urbanization,
(2) accelerated technological changes, (3) unprecedented levels of ageing
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Tracing the History of Diaspora Business
Tracing the History of Diaspora Business
__________________________________________________________________
populations, and (4) heightened global connectivity. While these four forces are by
no means new, my concern is with the scale, intensity, and the manner in which
they are creating Schumpetarian disruptions, forcing a rethink of the fundamental
assumptions underlying business models and practices.
The second concern relates to the way business researchers have thus far
responded to such calls and observations. For instance, a review conducted by
Maria Elo observed ‘research on diaspora in business is very fragmented and often
located in disciplinary silos.’4 A more comprehensive view of evolution of new
organisational skin, the diaspora business, is needed. This necessitates an escape
from the confines of disciplines and warrants adopting a more of an
interdisciplinary approach enabling concerted efforts ‘to focus on many systems,
subsystems and overlapping systems.’5
The third concern relates to the meaning of applying interdisciplinary
approaches. Most work in this area focuses on ‘integrating theories from different
disciplines’6 built on a premise that development of theories is based on
simplifying complex realities. Disciplines provide the necessary delimiters and
focus attention to certain dimensionalities of observations. As a result, no single
discipline can fully provide a comprehensive analysis of every aspect of the
explanation of reality of any phenomenon, let alone provide a basis for a
comprehensive treatment of forces and processes that simultaneously generate
systems, subsystems and overlapping systems referred to earlier.
If the focus of attention is on the formation and workings of the organisational
skins – businesses that diaspora are engaged in – it would be useful to understand
the different methods used for providing an explanation of their formations. Just
like the scholars studying family businesses have strongly advocated the need to
study families from a multidisciplinary perspective; this chapter provides an
argument for a much needed focus for understanding the formation of diaspora
businesses. The chapter employs an evolutionary process for analysing how
individuals become diaspora and offer an explanation of why certain diasporans
engage in establishing diaspora businesses. It is hoped that by conducting an
analysis along these lines will provide the much needed framework ‘to identify
salient issues for framing of research questions, data collection and structure and
the measurement of time and space related to contexts within this evolution.’7
Diasporans in business are individuals, many of whom experience the effects
of triple transformations. The first transformation involves individuals becoming
migrants. The focus of the second transformation is on migrants becoming
members of the diaspora. The third transformation is when some of the diasporans
engage in business activities by employing inherent and adopted cultural features
of both host and home places of domiciles. For the purposes of this paper,
diasporans in business may not have undergone these transformations themselves
but are impacted by migration through familial connections.
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5
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The chapter is organised as follows. The first part of the chapter traces the
significance of migration and embeddedness of the migrants in two places in the
formation of businesses established by them. This provides the much needed
context to the contemporary phenomenon of diaspora businesses. The second part
of the chapter adopts a case analytic approach to understand the Indian diaspora. It
draws on the past trends of internal migration and business formation in the Indian
context. Based on a brief analysis of Indian internal migrant populations and
business formation, the chapter suggests the need to escape the perception of
diaspora businesses as a new phenomenon. There are several aspects of the past
that one builds from to understand the structure, form and context in which
diaspora businesses operate. The final part of the chapter calls for setting up a
research agenda on a global scale to develop an interdisciplinary model to
understand the formation and development of diaspora business.
2. Migrants and Business Formations
A cursory examination of the history of migration suggests that movement of
humans was largely motivated by attempting to satisfy physiological, safety,
belongingness and love (social), esteem and self-actualization needs. These are
powerful motivating factors having been present since life began on earth. If one
believes that Africa is the continent where human history began, then migration of
people launched almost four million years ago; however, records of any semblance
of entrepreneurship were found much later. According to the History of
Entrepreneurship ‘human trading began around 17,000 BCE in New Guinea’.8
Since then there have been many movements of peoples and with movements of
peoples a form of commerce emerged. The Spice trade and the Silk trades are
examples of such links between migration and businesses.
From the first century AD at least, the Chinese had their own
terms for the northern and southern routes that led from the
Chinese capital to the ‘Western Regions’ (about as far as the
Oxus). And though silk was transported along a series of routes
across Central Asia to Europe, from China to Rome, though this
complex of tracks can be described as one of the world’s earliest
highways, the very name ‘Silk Road’ is somewhat misleading. It
suggests a continuous journey, whereas goods were in fact
transported by a series of routes, by a series of agents, passing
through many hands before they reached their ultimate
destination.9
Businesses were formed along these and other similar routes to service the
needs of migrants and the local populations. According to Marco Polo, the then
business landscape was such where ‘people live by trade and industry’.10 The
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S. Ram Vemuri
Tracing the History of Diaspora Business
__________________________________________________________________
interactions between migrant traders and local people of the area are lucidly
presented on the Silk Road. The following passage is an illustration of these
interactions.
This profusion of peoples, costumes, religions and languages,
this mixing in the bazaars of the oasis towns of Central Asia had
been there for millennia, although one of the most interesting
aspects of the history of the Silk Road is the rise and fall of
different groups.11
There are several such narratives of interlinkages between migration of people
and commercial activities. Although the way these links are formed may have
changed over the years, the motivations for these links between migration and
business formations have remained the same.
Businesses responded to the challenges of meeting the needs of the people –
those in business and those that depend on businesses for satisfying their needs and
wants. In the present day narrative context, the focus of attention has shifted to
migrants who call two places home – their country of origin (COO), and the
country of residence (COR). In the area of business, they are operating along
similar lines as their predecessors based on knowledge, connection and contextual
understanding in both the COO and COR. While the contemporary reference is to
countries and nation states, the actual underlying forces of influence linking
migration and business formation depends much more on the embedding’s in
places of origin and places of residence than on the spatial boundaries of a nation
state. There are core concepts that connect them through time. Principal among
these are the utilitarian desire for upward mobility by individuals and the
generation of trust.
The utilitarian desire for upward mobility is indeed an inherent feature of an
entrepreneur. In the case of diaspora business the desire of the individual to escape
the constraints imposed on the individual is so strong that migration in the initial
instant is seen as a push factor. Migration matters as boundaries are contested in
every aspect of life of the migrant. Applying the rationality assumption, the
individual calculates the cost of displacement from the place of origin and
compares it with the benefits of engagement in the place of destination. Often
these costs and benefits include a portfolio of factors over time and space. Once
mobility occurs most migrants attempt to generate trust in the place of new
residence. A common way to generate trust in the new place of residence is by aid
of ‘the central role of concrete personal relations and networks of relations’.12
The unique nature of diaspora business is that trust is built in places of origin,
as well as residence. It is therefore necessary to recognise activities of the diaspora
businesses as ‘socially constructed and maintained and historically determined by
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individual and collective actions expressed through organizations and
institutions’.13
Any analysis of diaspora business formations, must ‘be spatial-temporal,
incorporating the formation and change of social structures in time and space’.14
To fully appreciate the actors, their social networks and territorial conditions, one
must incorporate into one’s understanding real life immigrant narrations and apply
a case analysis of immigrant experiences which are individualistic and situation
specific.
Situation of immigrant experiences are often ‘complex as there are many
different push, pull, re-push and re-pull factors at play when entrepreneurial
decisions are made.’15 Representation, language, cultural performances, rituals and
extent of embedding all affect the formation of businesses. Developing an
understanding of the nexus between needs, migration experiences, and spatial
influences in home and host contexts is essential in developing a deeper analysis of
diaspora business formations.
3. Case Analysis: Indian Diaspora and Business Formations
Indian migration predates British occupation, although the type of crossings were
distinct as the ‘political map of pre-modern India, before the British arrived, was
made of countless Kingdoms with fluctuating boundaries’.16 Movement of people
was also prevalent in post-British India. There were many who migrated, for several
reasons, to distant lands under the British Raj17. Continuing with this trend, the post
free India enshrined freedom of mobility of people into its Constitution.
Indian constitution provides basic freedom to move to any part of
the country, right to reside and earn livelihood of their choice.
Thus, migrants are not required to register either at the place of
origin or at the place of destination. A number of economic,
social, cultural and political factors play an important role in the
decision to move.18
Lusome and Bhagat (2006) provide evidence of the scale of growth of lifetime
and intercensal migrants between 1971 and 2001 where they report ‘a steep
increase in the growth of migrants in 2001 with males achieving 50% increase over
that of 1991 figure’.19 So long as one can interpret, from an individual perception
of migration- using a cost benefit approach to displacement, one can readily
recognise that the cost of displacement is the same irrespective of being internal or
international, whereas international displacement is more rewarding than internal
migration. This is especially the case as ‘a man remains a member of his own
particular community even if he migrates to other parts of India or goes abroad and
even if he changes his occupation.’20 As a result, the first of the propositions
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S. Ram Vemuri
Tracing the History of Diaspora Business
__________________________________________________________________
concerning Indian diaspora is India’s international migration is a continuum of
internal migration.
The second proposition is that both internal and external Diasporas act as
enablers for forming diaspora businesses. Although there are very few contributors
that paid attention to the underlying processes in the formation of general as well
as diaspora businesses, those who examined the history of Indian business discuss
the stifling role of government policy before liberalization ‘retarding
entrepreneurial initiatives in India’,21 and those who have ‘stressed the
unwholesome effect of sociological factors like caste and religion’.22 The reason
why diaspora in the Indian context is an enabler of business formation lies ‘far
back in social history. India has long been composed of innumerable small
communities based on religious, functional, caste, and ethnic lines.’23 These
demarcations have inadvertently created business enclaves along ethnic and even
linguistic lines, within India. These enclaves of the past have now started to
emerge outside India with increase in migration.
Migration is seen as a means to break the shackles of the past and migrants feel
‘free to take the lead, either acting by themselves or in cooperation with absentee
interests’.24 As migrants, individuals are able to break the shackles of forces of
cultural, social, caste and ethnic containments and influences of their places of
origin. Their mobility provides opportunity to take lead in activities, including of
entrepreneurial nature, in places distant from their homelands. Government
policies, coupled with mercantilist capital, can often encourage, even direct, the
transitioning process away from fatalistic, predetermined destiny of occupational
classification directed by history, such as caste, and provide avenue for capitalists
to migrate and enable upward mobility through corporatisation.25
The rises in immigrants within India, Indian diasporans globally, and Indian
diasporan entrepreneurs are all evidences for pursuing a better and fulfilling life.
There are certain similarities and differences in the processes used by internal
migrants and Indian diasporans. A common element between both the migrants and
diasporans is the search for greener pastures through migration, as well as a quest
for increasing educational pursuits and having preference for white collar jobs for
themselves and their future generations. These are testimonials for individuals
pursuing upward mobility and Burton Stein’s’ characterisation of presence of
corporate mobility. The difference is the way networks are used to consolidate
behaviours and potentially increase chances for obtaining economic, political and
financial power through aggregation of segments of population either as
diasporans or migrants. In this paper we need to recognise diasporan as not
necessarily as a migrant but also descendants of migrants. Irrespective of the
differences, migration is still the core aspect of concern. Migration matters and is
not a new phenomenon. It enables individuals to break away from the shackles of
economic, socio-cultural features that stifle growth and development.
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The third proposition is that migrants often use migrant networks to consolidate
their ability to corporatize and increase their chances to obtain economic, political
and financial power. Aggregation of segments of population occurs and power is
sought through diaspora status in both places of origin and residence. The fabric of
the Indian society among the urban populations and the ethnic enclaves present in
the Indian cities is a testimony of such diasporas.
A cursory examination of the history of Indian internal migrant populations and
business formation, suggests that diaspora business is also not a new phenomenon.
However little is known of the structure, form and context in which current
diaspora businesses operate. Investigation of these aspects requires analysis at
several levels including business decisions and business climate aspects of the past.
4. Implications for Future Research Agenda
Formation of diaspora businesses is premised on establishing networks amongst
individuals from the same places of origin. Considering the formation of diaspora
business is not based simply on conducting a conventional risk assessment and
performing a SWOT analysis. It is about planning for transforming one’s living
and operating conditions. It requires specific individual capabilities and
organisational competencies to form diaspora businesses as they belong to the
tapestry of life in two spaces. They need to be dexterous enough to draw out the
threads without damaging either of the tapestries.
Investigating formation of diaspora businesses involves a detailed examination
of organizational design and the processes involved in creating these designs. A
global scale interdisciplinary model is needed to capture in detail the different
designs and the influence of past experiences of a home society and the realities of
the resident society that contribute to shaping the business psyche of the individual.
A model is needed to provide explicit understanding of the dynamics of business
formations emphasising individual’s aspiring for upward mobility through
migration without being too deeply embedded and entrenched in business thinking
in the socio-cultural fabric of the society neither at the place of new residence nor
the place of origin.
The call to develop such a model has many potential uses including the ability
to compare and contrast business skins of ethnic businesses, born global and the
like. The model will also enable a deeper understanding of diaspora, ethnic,
immigrant and organically evolved business by considering their structures, forms
and conducts. This chapter therefore ends with a call for setting an interdisciplinary
global research agenda to conduct an in-depth analysis of contemporary diaspora
businesses.
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S. Ram Vemuri
Tracing the History of Diaspora Business
__________________________________________________________________
Notes
1
The evidence is anecdotal and interpretive based on comments received by
anonymous reviewers of some well-established journals in the area of international
business.
2
Jan Rath and Robert Kloosterman, ‘Outsider Business: A Critical Review of
Research on Immigrant,’ Entrepreneurship, International Migration Review 34.3
(2000): 657.
3
Richard Dobbs, James Manyika and Jonathan Woetzel, The Four Global Forces
Breaking All the Trends, viewed 30 April 2015,
http://www.mckinsey.com/insights/strategy/the_four_global_forces_breaking_all_t
he_trends.
4
Maria Elo, ‘Diaspora Networks in International Business: A Review on An
Emerging Stream of Research,’ Handbook on International Alliance and Network
Research, ed. J. Larimo, N. Nummela and T. Mainela (UK: Edward Elgar,
forthcoming).
5
Ramona K. Zachary, ‘What Does a Multidisciplinary Scholar Want a SingularlyFocussed Economist to Know?’, CSWEP Newsletter, Summer 2012, 9.
6
Elizabeth Peters, ‘Lessons Learned from Working in Interdisciplinary Population
and Social Policy Programs,’ CSWEP Newsletter, Summer 2012, 6.
7
Zachary, ‘What Does a Multidisciplinary Scholar Want’, 9.
8
Ryan Allis, ‘The History of Entrepreneurship,’ The Startup Guide: Creating a
Better World Through Entrepreneurship, viewed 3 November 2014,
http://startupguide.com/world/the-history-of-entrepreneurship.
9
Frances Wood, ‘The Silk Road’, The Folio Society (Glasgow: The Bath Press
Colour Books, 2002), 9.
10
Ronald Latham, Marco Polo: The Travels (Harmondsworth: Penguin, 1958), 82.
11
Wood, ‘The Silk Road’, 25.
12
Martin Hess, ‘Spatial Relationships? Towards a Reconceptualization of
Embeddedness’, Progress in Human Geography 28.2 (2004): 174.
13
J. Wilkinson, ‘A New Paradigm for Economic Analysis?’, Economy and Society
26 (1997): 339.
14
Hess, ‘Spatial Relationships?’, 181.
15
S. R. Vemuri, ‘The Formation of Diaspora Entrepreneurs’, ZenTra Working
Papers in Transactional Studies 41 (2014): viewed 10 March 2015.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2519432.
16
History of India, last updated December 18, 2014. viewed 10 March 2015.
http://www.mapsofindia.com/history/.
17
A historical phenomenon of British rule and creation of the British Empire.
18
R. Lusome and R. B. Bhagat, ‘Trends and Patterns of Internal Migration in India,
1971-2001’. Paper presented at the annual conference of the Indian Association for
the Study of Population (IASP), Thiruvananthapuram, India, June 7-9, 2006), 2.
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19
Luscome and Bhagat, ‘Trends and Patterns’, 4.
Helen B. Lamb, ‘The Indian Business Communities and the Evolution of an
Industrial Class’, Pacific Affairs 28.2 (1955):103.
21
Dwijendra Tripathi, ‘Occupational Mobility and Industrial Entrepreneurship in
India: A Historical Analysis’, the Developing Economies 19.1 (1981): 52
22
Ibid., 52.
23
Lamb, ‘The Indian Business Communities’, 103.
24
Lamb, ‘The Indian Business Communities’, 111.
25
Most of the financial capital for building the ports of Calcutta and Bombay under
the British occupation of India came from the Indian mercantilist classes outside of
these cities. There was also a huge influx of immigrants from neighbouring parts of
India to work in the cotton mills, as construction workers and other manual labour.
Indian economy was largely built on the back of internal migration.
20
Bibliography
Allis, Ryan. ‘The History of Entrepreneurship’, The Startup Guide: Creating a
Better World Through Entrepreneurship, viewed on 3 November 2014.
http://startupguide.com/world/the-history-of-entrepreneurship/.
Dobbs, Richard, James Manyika and Jonathan Woetzel. ‘The Four Global Forces
Breaking All the Trends’, McKinsey and Company, April 2015. viewed on 30
April 2015.
http://www.mckinsey.com/insights/strategy/the_four_global_forces_breaking_all_t
he_trends.
Elo, Maria. ‘Diaspora Networks in International Business: A Review on an
Emerging Stream of Research’, Handbook on International Alliance and Network
Research, edited by J. Larimo, N. Nummela, and T. Mainela, UK: Edward Elgar,
Forthcoming.
Hess, Martin. ‘‘Spatial’ relationships? Towards a reconceptualization of embedded
ness’, Progress in Human Geography 28.2 (2004):174-181.
‘History of India’. Last updated 18 December 2014. viewed on 18 May 2015.
http://www.mapsofindia.com/history/.
Lamb, Helen B. ‘The Indian Business Communities and the Evolution of an
Industrial Class’, Pacific Affairs 28.2 (1955) 101-116.
Latham, Ronald. Marco Polo: The Travels. Harmondsworth: Penguin, 1958.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
S. Ram Vemuri
Tracing the History of Diaspora Business
__________________________________________________________________
Lusome, R. and R. B. Bhagat. ‘Trends and Patterns of Internal Migration in India,
1971-2001’. Paper presented at the annual conference of Indian Association for the
Study of Population (IASP), Thiruvananthapuram, India, June 7-9, 2006.
Peters, Elizabeth. ‘Lessons Learned From Working in Interdisciplinary Population
and Social Policy Programs’, Newsletter of the American Economic Association’s
Committee on the Status of Women in the Economics Profession, (Summer 2012):
6-9.
Rath, Jan and Robert Kloosterman. ‘Outsider Business: A Critical Review of
Research on Immigrant Entrepreneurship’, International Migration Review 34:3
(2000): 657-681.
Tripathi, Dwijendra. Occupational Mobility and Industrial Entrepreneurship in
India: A Historical Analysis, The Developing Economies 19.1 (1981) 52-68.
Vemuri, S. R. ‘The Formation of Diaspora Entrepreneurs’, ZenTra Working Papers
in Transactional Studies 41 (November 2014). viewed on 10 March 2015.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2519432.
Wilkinson, J. ‘A New Paradigm for Economic Analysis?’ Economy and Society
26.3 (1997) 335-339.
Wood, Frances. The Silk Road. The Folio Society. Glasgow: The Bath Press
Colour Books, February 2002.
Zachary, Ramona K. ‘What Does a Multidisciplinary Scholar Want a SingularlyFocussed Economist to Know?’, Newsletter of the American Economic
Association’s Committee on the Status of Women in the Economics Profession,
(Summer 2012): 9-10.
S. Ram Vemuri is an Economist who is currently an Associate Professor of
Economics at Charles Darwin University, Northern Territory, Australia. He has
written extensively on interactions between economics, diasporas, pluralism,
multiculturalism and ethics.
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12
Maria Elo and Liesl Riddle
Abstract
The role of diaspora as an economic actor is multifaceted, and the development
potential of diaspora investment has been acknowledged in particular. The majority
of extant research examining diaspora economic activity focuses on the dichotomy
of the developed-developing country context and focuses on the flows of
remittances and home-country investments. Home-country investments via
diaspora portfolio investment (DPI), such as diaspora bonds, home-country equity
or debt-structured investments, etc. and diaspora direct investment (DDI) through
which business operations are brought to and started in the diasporan’s home
country have also been noted as important forms of diaspora investment in the
global economy. Extant research regarding diaspora investment, though, often is
applied to a bounded group of actors and a distinct activity set but with little regard
or recognition of the fact that diaspora investment is quite heterogeneous, taking
many shapes and forms, proceeding from origin to destination in different ways, is
initiated by different actors, and is a mean for various ends. We reframe the
conversation about diaspora investment by offering a more granular
conceptualization of the phenomenon. In this chapter, we conceptualize diaspora
investment as various claims, including stances taken by individuals, families,
diaspora-owned firms, and other collective structures, such as investment
funds/clubs. Based on a literature review, we construct an analytical typology to
deconstruct the phenomenon to enhance our understanding of diaspora investment.
Key Words: Diaspora, investment, investment motivation, foreign direct
investment, portfolio investment, altruism, liability of foreignness, social
investment.
*****
1. Introduction
As Brubaker (2005) notes, great ambiguity plagues the social science literature
regarding the specific boundaries and characteristics of what constitutes a
‘diaspora.’ For example, some definitions1 limit their definitions to ‘transnational
populations living in a country other than their country of origin, but with ties to
the country of origin’, while others2 embrace a more expansive definition,
including not only migrants but also their descendants who maintain a relationship
with their country of origin (COO). Brubaker faults scholars with
misconceptualising diasporas as a bounded groups, assuming these individuals
move in concert or are homogeneous, arguing that diaspora is a ‘project, claim or a
stance’.3 He posits that ‘we should seek to bring the [diaspora] struggles
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Understanding Diaspora Investment
Understanding Diaspora Investment
__________________________________________________________________
themselves into focus, without presupposing that they will eventuate into bounded
groups’.4
Since the turn of the century, the international business literature has
increasingly recognized diaspora entrepreneurs and investors as important sources
of capital and innovation in the global economy.5 Diaspora investment has been
utilized to describe cross-border business-directed investment flows transacted by a
diasporan (an individual living in diaspora) in their country of origin. Remittances,
whether transacted by an individual diasporan or a collective of diasporans (e.g.,
hometown associations), are one of the most commonly diaspora investments.6 The
term has been used to describe direct investment (DDI) through international
entrepreneurship in the country of origin by a repatriated or a circular-migrating
diasporan7 or foreign direct investments made in the country of origin by a
multinational enterprise (MNE) as the result of managerial actions/advocacy led by
a diasporan employed by the MNE. It also has been used to describe portfolio
investments (DPI) made in the country of origin by a diasporan or groups of
diasporans, including (1) the purchase of sovereign bonds issued by the country of
origin government,8 (2) the purchase of equity in companies in the country of
origin, (3) investments made in fixed-income or other securities that lend money to
firms exclusively in the country of origin, (4) stock purchases in the country of
origin, and (5) investments made in mutual funds comprised of firms in the country
of origin.9
Thus, in this literature stream, the term ‘diaspora investment’ often is applied to
a bounded group of actors and a distinct activity set but with little regard or
recognition of the fact that diaspora investment is quite heterogeneous, taking
many shapes and forms, proceeding from origin to destination in different ways, is
initiated by different actors, and is a mean for various ends.
We hope to reframe the conversation about diaspora investment by offering a
more granular conceptualization of the phenomenon. In this chapter, we
conceptualize diaspora investment as various claims, including stances taken by
individuals, families, diaspora-owned firms, and other collective structures, such as
investment funds/clubs. We ask: Are there elements of investment situations
related to context and content that have been previously overlooked? What are the
investment objects and decision-making dynamics that current diaspora investment
theorizing has examined and what is missing?
The chapter provides a conceptual and analytical discussion on diaspora
investment. First we provide a short theoretical review on the current concepts.
Then we synthesize current research literature findings and theories, offering a
tentative analytical typology of diaspora investments and related contexts. Finally,
we conclude with a discussion suggesting issues for future research and empirical
testing.
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2. Theoretical Review and Framework
Remittances as a form of capital flow and investment have dominated the
theoretical focus on diaspora investment,10 but diaspora investment stretches
beyond remittances.11 Two central assumptions have been identified in guiding
diaspora investment: diaspora investors benefit from special information regarding
investment opportunities in their countries of origin, and they accept below-market
rates of return on investment due to patriotic sentiments.12 Yet, the static and
simple view of investment-beneficial information possessed by diasporans may
become diluted over time by acculturation and assimilation and may also be invalid
due to cultural complications.13 Furthermore, sentiments of altruism may actually
create a constraining effect.14 Others have argued that diaspora investment may be
also be motivated in some cases by instrumental motivations, arguing some
diasporans invest in their countries of origin to acquire social-status or acquire
political gains.15
Thus, we propose that these two assumptions are not necessarily universally
valid, instead, they are case sensitive.
2.1. The Concept of ‘Who’, i.e. the Forms of Investor
The current literature has often focused on the conceptual level of ‘diaspora’
without explicit attention on the question who is this diaspora, whether it is an
individual or collective actor or an institutional one. This distinction is necessary
due to the differences in behaviour and motivations. An individual diasporan that
acts as an investor is influenced by many factors, such as nationality, gender,
education, necessity, available alternatives in life, level of prosperity and family
setting.16 This actor type is greatly affected by its socio-cultural and religious
embeddedness.17 The family as an investor has similarities in constraints and
opportunities like the individual diasporan investor, but familial networks and
boundaries are more extensive and complicated. They may even involve guanxistyle behaviour.18 On the other hand, firms owned or co-owned by diasporans may
represent classic foreign investors, whose foreignness and behaviour varies
depending on the context. However, the behaviour is mostly rational and based on
economic benefit and profit. Institutional investors, like diaspora investment funds
or clubs are collective actors motivated by profit and opportunity, while they often
also present motivations related to homeland development, innovation or other
localized or social features. Due to their investor character they are expected to act
as other funds too.
Thus, we propose that there are distinct categories of investors from individuals
to diaspora investment funds that behave differently.
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Maria Elo and Liesl Riddle
Understanding Diaspora Investment
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2.2. The Concept of ‘Where’ i.e. the Place and Location of Investment
Concerning diasporans their place of investment is often connected to
homeland or home region, particularly due to their market-specific knowledge and
social network advantage.19
As noted earlier, home-country investments may not be limited to remittances
or entrepreneurship, instead, they may take the form of diaspora portfolio
investment (DPI), such as diaspora bonds, home-country equity or debt-structured
investments, etc. or diaspora direct investment (DDI) through which business
operations are brought to and started in the diasporan’s home country.20 Beyond
the homeland orientation, there is also notable research literature illustrating
diaspora investment in host country and host-country based entrepreneurship.21
Beyond investment flows to home or host country, diasporans may also invest in
third countries or build clusters, particularly in cases of transnational, circular and
cosmopolitan diaspora.22 For example, Gao, Liu, and Zou (2013) provide evidence
that outward FDI is positively affected by diaspora.
Thus, we propose that the flow of diaspora investment has numerous directions
and targets.
2.3. The Concept of Reasoning or ‘for What’, i.e. the Type of Investment and
its Object
The reason of investment and its object has not received much attention. The
dominant focus on developing and emerging-country settings has guided the
research attention towards economic development and respective investment funds,
tools and areas.23 Schommers (2013) illustrates the contributions of diaspora
investment funds as beneficial form of investment, while Riddle (2008) points out
the importance of diaspora entrepreneurship as one type of investment object.
Diaspora investment behaviour differs from traditional foreign direct investment
(FDI) and according to Debass and Ardovino (2009) the fact that diaspora direct
investment (DDI) has emerged and improved upon traditional FDI even during a
major economic downturn represents a new paradigm shift. For example, the
models of FDI are divided as vertical or horizontal: firms invest horizontally to sell
the same goods sold at home abroad, and make vertical investments to exploit
relative factor endowment differences,24 however, the object of investment may be
influenced by the diaspora family situation and dynamics that have no connection
to transaction costs or macro-economic factors.25
Thus, we propose that the investment object related dynamics of diaspora
investments require more holistic attention as they may involve previously
neglected factors and be more complicated, but we acknowledge the central
meaning of the object of investment having explanatory power.
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2.4. The Concept of ‘Why’, i.e. the Purpose and Motivation behind Investing
Perhaps due to emphasis on developing-country diasporas, there are strong
assumptions related to the reasons behind of such investment decisions as
diasporans are considered to be altruistic and homeland-oriented. Many scholars
have also emphasized the underlying desire to return to the country of origin,
implicating that diasporan may be more affine to invest and plan their future to
realize this dream.26 Thus, the current understanding seems to emphasize
emotional, cultural and ethnic aspects of diaspora investment behaviour.
On the other hand, there are studies illustrating the factual boundaries and
constraints of diasporic belonging in the investment context and other studies
pointing out that the expected emotional motivation may not be valid for all. Some
have argued that diaspora investment motivation may be quite instrumental,
undertaken to gain returns to social-status (e.g., being held in higher regard by
peers in country of origin and/or in country of residence wherever diaspora
investment is deemed by others to be honourable or duty-bound activity) or to
acquire political influence, access, and/or political protection for friends and family
back home.27 At the same time, there is a plethora of research on ethnic enclaves
and ethnic and immigrant entrepreneurship, which takes place in host country
context and does not provide indications for investment behaviour towards the
homeland.
In similar vein, the reasons and purpose of investing are constructed
economically, culturally, politically, socially and emotionally. Necessity motivates
entrepreneurship and opportunity exploration. Diaspora families, clans and
networks, and their respective interdependencies influence these drivers for
investment. They may involve altruistic aspects or other non-economic triggers
beyond growth and profit, such as future expectations and opportunities for the
descendants, or even possibilities for the homeland return.28
Thus, we propose that the investment drivers on individual level involve
idiographic elements potentially related to the investor’s life cycle and politicalsocio-cultural setting.
2.5. The Concept of Context, i.e. Enablers, Support Systems, Barriers, Risks
and Opportunities
The literature illustrates that diaspora knowledge and networks are critical
resources.29 It illustrates the diasporans may overcome institutional and other
problems than foreign investors, they are also able to explore, perceive and develop
opportunities better and reduce high risks by their diaspora features and
competences, e.g. regarding liabilities of foreignness and outsidership. Different
country and market context present idiographic contexts which evolve over time,
thus it is dangerous to deduce any generalizations across contexts.30 Still, the
revenue expectations on DI may be higher than for mono-cultural investors as
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Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
diasporans have the ability to compare alternatives and these contexts
internationally.
Thus, we propose that the constellation of factors related to the DI context is
idiographic and particularly culture- and time-specific, which diminishes the
explanatory power of contextual cross-comparisons.
3. Analytical Typology for Diaspora Investment
Based on the conceptual dimensions deduced from the extant research
literature, we synthesized a tentative analytical typology that illustrates the key
elements necessary to understand diaspora investment, see Table 1.
Table 1: Analytical typology for diaspora investment
WHO?
Investor
WHERE?
Place of investment
Person
Home/host country
Family
Home/host country
Diasporaowned
Firm
Home/host country
Collective
actor/fund
often home country
WHO?
Investor
Person
Family
RETURN?
Motivations driving
the investment
Economic necessity,
Personal financial
independence, profit,
willingness to help,
fulfilment of social duty,
social-status gains,
political benefits, return
to homeland
Economic necessity,
FOR WHAT?
Type of investment and its
object
Remittances for family,
Entrepreneurial investment
in a venture, capital
investment in a venture,
fund or other
Remittances for family,
Entrepreneurial investment
in a venture, capital
investment in a venture,
fund or other
manufacturing, distribution
or other facilities, firm
establishment, shares, joint
venture, merger/acquisition,
brownfield/greenfield
investment
home country
development/investment
logic, ethnic or sociocultural or religious
concept/branding
ENABLER?
Knowledge and
connections
Person-centred, family-,
socio-cultural- and religious
networks, learning systems
Person/family-centred,
WHY?
Purpose of investing
Livelihood, social status,
individual or family
prosperity, profit
Livelihood, social status,
individual/family
prosperity, family and
clan future/position, profit
Expansion, growth,
synergies, profit, other
development and/or profit
SUPPORT OR BARRIER?
Country setting and
corruption
Difficult business
environment with high
corruption is a barrier, but
the diasporan may be
better equipped to cope
with the challenge, access
to local-based help
Difficult business
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18
19
__________________________________________________________________
altruism, willingness to
help, social drivers,
return to homeland,
future for the
descendant, profit
family-, socio-cultural- and
religious networks, learning
systems, family ‘guanxis’
Diasporaowned
Firm
Benefit, profit,
market/area coverage
Entrepreneurial and business
networks
Collective
actor/fund
profit, societal position
or development
WHO?
Investor
SUPPORT OR
BARRIER?
Institutions and legal
frame
Support programs and
local-based help may
constitute facilitating
factors, while
impediments to
repatriation, circular life
and venturing are
barriers
Support programs and
local-based help may
constitute facilitating
factors, while
impediments to
repatriation, circular life
and venturing are
barriers, marriages and
other social connections
drive investments and
overcome impediments
Support and investment
programs may facilitate
entry, particularly SME
targeted. Legal
frameworks demanding
IJVs may be easier
overcome.
‘Foreignness’ creates
idiographic
circumstances
Diasporans and their
networks, international
business competences and
capabilities
HIGH OR LOW?
Risk
environment with high
corruption is a barrier, but
the diaspora family may
be better equipped to cope
with the challenge, access
to local-based and
transnational help
Difficult business
environment and high
corruption are barriers, but
the diaspora resources
behind the firm may be
better equipped to cope
with the challenges
Sensitive to corruption if
not transparent, barriers
may be institutionalized
due to ‘foreignness’
HIGH OR LOW?
Opportunity
Risk
is
individually
perceived, risk for the
diasporan may lower due to
market specific knowledge,
diasporans are not riskaffine per se
Opportunity is a key
driver, opportunity is
often perceived easier by a
diasporan than by others
due
to
dual/multiple
embeddedness
Risk is contemplate in the
family, risk for them may be
lower due to market specific
knowledge,
diaspora
families are not risk-affine
per se due to social
constraints
Opportunity is actively
explored
and
often
perceived easier due to
transnational
family
‘guanxis’
and
their
dual/multiple
embeddedness
Risk is calculated rationally
according to the investment
case
Opportunity is explored
and exploited influenced
by
the
transnational
absorptive capacity of the
firm
High risks are difficult to be
alleviated and expectations
are loaded
Opportunity exploitation
mechanisms may suffer
from inefficiency due to
actor type, even suffer
Person
Family
Diasporaowned
Firm
Collective
actor/fund
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Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
from lack of
acceptance (both
and host country).
local
home
4. Discussion and Conclusion
We conclude that there are very different dynamics in various diaspora
investment cases depending on whom is investing and for what, as individuals and
institutionalized diaspora actors have different motivations and the investment
object also significantly influences the diasporic willingness and interest. There are
both negative and positive examples of diaspora investments -- there are often
contradictory findings on various influence factors -- but the analysis of them has
been rather invisible, leading to a conceptually blurred situation where the two key
assumptions dominate.
We point out that the concept of investor should be the first analytical step and
carefully designed also in policy making when approaching ways to establish tools
for diaspora investment. The dominant dichotomy of home-host investment market
in conceptual thinking is also somewhat misleading as diaspora activities and
organizations are per se international, transnational and often crossing several
borders and boundaries. We suggest that the location of investment target and the
location of the managers of that investment are to be employed in analysing the
‘place’ of investment. There is some locality where the investment should create
value and on the other side; not all diaspora investments are managed on that grassroot level but are instead administered by specialists located in other places. The
type of investment is another key concept that needs analysis, since classic foreign
direct investment by diasporans, seed money, diaspora funds and helping family
abroad in their entrepreneurial paths represent vary different situations.
Theory as well as investors and researchers can benefit from applying a more
structured analysis on those particular elements that constitute diaspora investment
in their case since many extant assumptions do not apply across the typology.
Notes
1
e.g., Erica Usher, The Millennium Development Goals and Migration (New York:
United Nations Publications, 2005), 47.
2
e.g., William Safran, ‘Diasporas in Modern Societies: Myths of Homeland and
Return’, Diaspora: A Journal of Transnational Studies 1.1 (1991): 83-99.
3
Rogers Brubaker, ‘The ‘Diaspora’ Diaspora’, Ethnic and Racial Studies 28.1
(2005): 12.
4
Brubaker, ‘The ‘Diaspora Diaspora’, 13.
5
e.g, Kate Gillespie, et al., ‘Diaspora Interest in Homeland Investment’, Journal of
International Business Studies 30.3 (1999): 623–634; Peter J. Buckley, Jeremy
Clegg and Chengqi Wang, ‘The Impact of Inward FDI on the Performance of
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
20
21
__________________________________________________________________
Chinese Manufacturing Firms’, Journal of International Business Studies (2002):
637-655; James Rauch and Vitor Trindade, ‘Ethnic Chinese Networks in
International Trade’, Review of Economics and Statistics 84.1 (2002): 116-130;
compare also Ravi Ramamurti, ‘Developing Countries and MNEs: Extending and
Enriching the Research Agenda’, Journal of International Business Studies 35.4
(2004): 277-283; Masaaki Kotabe, et al., ‘Diaspora Investment and
Entrepreneurship: The Role of People, Their Movements, and Capital in the
International Economy’, Journal of International Management 19.1 (2013): 3-5;
Henry Chung and Rosalie Tung, ‘Immigrant Social Networks and Foreign Entry:
Australia and New Zealand Firms in the European Union and Greater China.
International Business Review 22.1 (2013): 8-31.
6
Paul Vaaler, Diaspora Concentration and the Venture Investment Impact of
Remittances, Journal of International Management 19.1 (2013): 26–46.
7
cf. Thomas Debass and Michael Ardovino, Diaspora Direct Investment (DDI):
The Untapped Resource for Development (Washington DC: United States Agency
for International Development, 2009), 1-17; Sheena McLaughlin, et al., ‘Temporal
and Circular Migration: Opportunities and Challenges’, Working paper no. 35,
March 2011, European Migration and Diversity, Europe’s Political Economy
Programmes, European Policy Center, ISSN-1782-2424, 2011.
8
Dilip Ratha, Economic Implications of Remittances and Migration (Washington
DC: World Bank, 2006).
9
Liesl Riddle and Tjai Nielsen, ‘A Cross-Country Comparison of Policies to
Strengthen Diaspora Investment and Entrepreneurship’, Realizing the Potential of
Diasporas to Reduce Poverty and Enhance Development eds. Arun Kashyap,
Manuel Montes and Krishnan Sharma (New York: United Nations Publications,
2011).
10
cf. Paul Vaaler, ‘Diaspora Concentration and the Venture Investment Impact of
Remittances’, Converting Migration Drains into Gains: Harnessing the Resources
of Overseas Professionals, eds. Clay G. Wescott and Jennifer Brinkerhoff
(Washington, DC: Asian Development Bank, 2006): 26-46.
11
e.g. Tjai Nielsen and Liesl Riddle, ‘Investing in Peace: The Motivational
Dynamics of Diaspora Investment in Post-conflict Economies’, Journal of
Business Ethics 89.4 (2009): 435-448; Yevgeni Kuznetsov, ‘Mobilizing
Intellectual Capital of Diasporas: From First Movers to a Virtuous Cycle’, Journal
of Intellectual Capital 9.2 (2008): 264–282.
12
Aaron Terrazzas, ‘Diaspora Investment in Developing and Emerging Country
Capital Markets: Patterns and Prospects’, Diasporas: New Partners in Global
Development Policy (Washington, DC: Migration Policy Institute, 2010): D 9.
13
cf. Rainer Silbereisen, ‘New Research on Acculturation among Diaspora
Migrants’, International Journal of Psychology 43.1 (2008): 2-5; Kate Gillespie,
Liesl Riddle and Brad McBride, ‘Globalization, Acculturation, and Local
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
Managers in Developing Countries’, International Journal of Cross-Cultural
Management 10.1 (2010): 37-53.
14
cf. Helena Barnard and Catherine Pendock, ‘To Share or Not to Share: The Role
of Affect in Knowledge Sharing by Individuals in a Diaspora’, Journal of
International Management 19.1 (2013): 47-65; Kate Gillespie et al., ‘Diaspora
Interest in Homeland Investment’, 623-634.
15
Nielsen and Riddle, ‘Investing in Peace: The Motivational Dynamics of
Diaspora Investment in Post-Conflict Economies’, 435-448; Benjamin A. T.
Graham, Capital and Chaos: Fragile States, Political Risk and Foreign Direct
Investment (PhD dissertation. San Diego, California: University of California San
Diego, 2012).
16
Maria Elo and Päivi Jokela, ‘Re-Conceptualizing the Role of Family Context in
Emerging Economy Family Business and Entrepreneurship’, Paper presented at
EURAM conference 2015, Family Business in Emerging, Developing, and
Transition Economies, Warsaw, 17-20.6.2015.
17
Maria Elo and Päivi Jokela, ‘Social Ties, Bukharian Jewish Diaspora and
Entrepreneurship: Narratives from Entrepreneurs’, New Perspectives in Diaspora
Experience, eds. C. Rapoo, M. L. Coelho and Z. Sarwar (Oxford: InterDisciplinary Press, 2014), 143–155.
18
Joachim Ramström, ‘Inter-Organizational Meets Inter-Personal: An Exploratory
Study of Social Capital Processes in Relationships between Northern European and
Ethnic Chinese Firms’, Industrial Marketing Management 37.5 (2008): 502-512.
19
Gillespie, et al., ‘Diaspora Interest in Homeland Investment’, 623-634; Tjai M
Nielsen and Liesl Riddle, ‘Why Diasporas Invest in the Homeland: A Conceptual
Model of Motivation’ (July 1, 2007). retrieved 2.5.2015, Available at SSRN:
http://ssrn.com/abstract=987725 or http://dx.doi.org/10.2139/ssrn.987725; Sara
Flisi and Marina Murat, ‘The Hub Continent: Immigrant Networks, Emigrant
Diasporas and FDI’, The Journal of Socio-Economics 40.6 (2011): 796-805; and in
developing country context see also Jean-Marie Nkongolo-Bakenda and Elie V.
Chrysostome, ‘Engaging Diasporas as International Entrepreneurs in Developing
Countries: In Search of Determinants’, Journal of International Entrepreneurship
11.1 (2013): 30–64.
20
cf. Debass and Ardovino, Diaspora Direct Investment (DDI): The Untapped
Resource for Development, 1-17.; Liesl Riddle, ‘Diasporas: Exploring their
Development Potential’, Journal of Microfinance/ESR Review 10.2 (2008): 28-35;
Usher, ‘The Millennium Development Goals and Migration.’
21
e.g. David M. Hart and Zoltan J. Acs, ‘High-tech Immigrant Entrepreneurship in
the United States’, Economic Development Quarterly, 25.2 (2011), 116–129;
Masud Chand and Majid Ghorbani, ‘National Culture, Networks and Ethnic
Entrepreneurship: A Comparison of the Indian and Chinese Immigrants in the US’,
International Business Review, 20.6 (2011), 593–606; Rocio Aliaga-Isla and Alex
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
22
23
__________________________________________________________________
Rialp, ‘How Do Information and Experience Play a Role in the Discovery of
Entrepreneurial Opportunities? The Case of Latin-American Immigrants in
Barcelona’, Latin American Business Review 13.1 (2012): 59-80; see more on
family dimension in Tiia Vissak and Xiaotian Zhang, ‘Chinese Immigrant
Entrepreneurs’ Involvement in Internationalization and Innovation: Three
Canadian Cases’, Journal of International Entrepreneurship 12.2 (2014): 183-201.
22
AnnaLee Saxenian, ‘Transnational Communities and the Evolution of Global
Production Networks: the Cases of Taiwan, China and India’, Industry and
Innovation, 9.3(2002a), 183-202; AnnaLee Saxenian, ‘Silicon Valley’s New
Immigrant High-growth Entrepreneurs’, Economic development quarterly,
16.1(2002b), 20-31.
23
cf. Aaron Terrazas, Diaspora Investment in Developing and Emerging Country
Capital Markets: Patterns and Prospects; Alan Smart and Jinn-Yuh Hsu, ‘The
Chinese diaspora, Foreign Investment and Economic Development in China’, The
Review of International Affairs, 3.4(2004), 544-566.
24
Flisi and Murat, ‘The Hub Continent. Immigrant Networks, Emigrant Diasporas
and FDI’, 796-805
25
Elo and Jokela, Social Ties, Bukharian Jewish Diaspora and Entrepreneurship:
Narratives from Entrepreneurs, 143-155.
26
cf. Robin Cohen, Global diasporas: An Introduction. (London: Routledge, 2008)
27
Graham, ‘Capital and Chaos: Fragile States, Political Risk and Foreign Direct
Investment’.
28
cf. Safran, ‘Diasporas in Modern Societies: Myths of Homeland and Return’;
Cohen, Global Diasporas: An Introduction; 83-99; Liesl Riddle and Jennifer
Brinkerhoff. ‘Diaspora Entrepreneurs as Institutional Change Agents: The Case of
Thamel. com’, International Business Review, 20.6 (2011): 670-680.
29
Rosalie L. Tung, ‘Brain Circulation, Diaspora, and International
Competitiveness’, European Management Journal, 26.5 (2008), 298-304; Sheena
McLaughlin et al. Temporal and Circular Migration: Opportunities and
Challenges; Exequiel Hernandez, ‘Finding a Home away from Home Effects of
Immigrants on Firms’ Foreign Location Choice and Performance’, Administrative
Science Quarterly, 59.1(2014), 73-108.
30
e.g. Noraini Abu Talib, et al.. ‘Leveraging Malaysian Diaspora for Cluster
Development Initiatives’, Business Strategy Series, 13.5(2012), 239-247.
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© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
Aliaga-Isla, Rocio and Alex Rialp. ‘How Do Information and Experience Play a
Role in the Discovery of Entrepreneurial Opportunities? The Case of LatinAmerican Immigrants in Barcelona’. Latin American Business Review 13.1 (2012):
59–80.
Barnard, Helena and Catherine Pendock. ‘To Share or Not to Share: The Role of
Affect in Knowledge Sharing by Individuals in a Diaspora’. Journal of
International Management 19.1 (2013):47-65.
Brubaker, Rogers. ‘The ’Diaspora’ Diaspora’. Ethnic and Racial Studies 28.1
(2005): 1-9.
Buckley, Peter J., Jeremy Clegg and Chengqi Wang. ‘The Impact of Inward FDI
on the Performance of Chinese Manufacturing Firms’. Journal of International
Business Studies 33.4 (2002): 637-655
Chand, Masud and Majid Ghorbani. ‘National Culture, Networks and Ethnic
Entrepreneurship: A Comparison of the Indian and Chinese Immigrants in the US’.
International Business Review 20.6 (2011): 593–606.
Chung, Henry F. and Rosalie Tung. ‘Immigrant Social Networks and Foreign
Entry: Australia and New Zealand Firms in the European Union and Greater
China’. International Business Review 22.1 (2013): 18-31.
Cohen, Robin. Global Diasporas: An Introduction. New York: Routledge, 2008.
Debass, Thomas and Michael Ardovino. Diaspora Direct Investment (DDI): The
Untapped Resource for Development. Washington, DC: United States Agency for
International Development, 2009.
Elo, Maria and Päivi Jokela. ‘Social Ties, Bukharian Jewish Diaspora and
Entrepreneurship: Narratives from Entrepreneurs’, New Perspectives in Diaspora
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Emerging Economy Family Business and Entrepreneurship’. Paper presented at
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24
25
__________________________________________________________________
Flisi, Sara and Marina Murat. ‘The Hub Continent. Immigrant Networks, Emigrant
Diasporas and FDI’. The Journal of Socio-Economics 40.6 (2011): 796-805.
Gao, Lan, Xioahui Liu and Huan Zou. ‘The Role of Human Mobility in Promoting
Chinese Outward FDI: A Neglected Factor?’. International Business Review 22.2
(2013): 437-449.
Gillespie, Kate, Liesl Riddle, Edward Sayre and David Sturges. ‘Diaspora Interest
in Homeland Investment’. Journal of International Business Studies 30.3 (1999):
623–634.
Gillespie, Kate, Liesl Riddle and Brad McBride. ‘Globalization, Acculturation, and
Local Managers in Developing Countries’. International Journal of Cross-Cultural
Management 10.1 (2011): 37-53.
Graham, Benjamin. A. T. Capital and Chaos: Fragile States, Political Risk and
Foreign Direct Investment. PhD dissertation, San Diego, California: University of
California San Diego, 2012.
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United States’. Economic Development Quarterly 25.2 (2011): 116–129.
Hernandez, Exequiel. ‘Finding a Home Away from Home: Effects of Immigrants
on Firms’ Foreign Location Choice and Performance’. Administrative Science
Quarterly 59.1 (2014): 73-108.
Kotabe, Masaaki., Liesl Riddle., Petra Sonderegger and Florian A. Täube.
‘Diaspora Investment and Entrepreneurship: The Role of People, Their
Movements, and Capital in the International Economy’. Journal of International
Management 19.1 (2013): 3-5.
Kuznetsov, Yevgeni. ‘Mobilizing Intellectual Capital of Diasporas: From First
Movers to a Virtuous Cycle’. Journal of Intellectual Capital 9.2 (2008): 264–282.
McLoughlin, Sheena, Rainer Münz, Rudolf Bünte, Göran Hultin, Wolfgang Müller
and Ronald Skeldon. ‘Temporal and Circular Migration: Opportunities and
Challenges’, Working paper no. 35, March 2011, European Migration and
Diversity, Europe’s Political Economy Programmes, European Policy Center,
ISSN-1782-2424.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
Nielsen, Tjai. M. and Liesl Riddle. Why Diasporas Invest in the Homeland: A
Conceptual Model of Motivation, Available at SSRN 987725 (July 1, 2007).
retrieved 2.5.2015, Available at SSRN: http://ssrn.com/abstract=987725 or
http://dx.doi.org/10.2139/ssrn.987725
———. ‘Investing in Peace: The Motivational Dynamics of Diaspora Investment
in Post-Conflict Economies’. Journal of Business Ethics 89.4 (2009): 435-448.
Nkongolo-Bakenda, Jean-Marie and Elie V. Chrysostome. ‘Engaging Diasporas as
International Entrepreneurs in Developing Countries: In Search of Determinants’.
Journal of International Entrepreneurship 11.1 (2013): 30–64.
Ramamurti, Ravi. ‘Developing Countries and MNEs: Extending and Enriching the
Research Agenda’. Journal of International Business Studies 35.4 (2004): 277-283.
Ramström, Joachim. ‘Inter-Organizational Meets Inter-Personal: An Exploratory
Study of Social Capital Processes in Relationships between Northern European and
Ethnic Chinese Firms’. Industrial Marketing Management 37.5 (2008): 502-512.
Ratha, Dilip. Economic Implications of Remittances and Migration. Washington
DC: World Bank, 2006.
Rauch, James. E. and Vitor Trindade. ’Ethnic Chinese Networks in International
Trade’. Review of Economics and Statistics 84.1 (2002): 116-130.
Riddle, Liesl. ‘Diasporas: Exploring Their Development Potential’. Journal of
Microfinance/ESR Review 10.2 (2008): 28-35.
Riddle, Liesl and Tjai M. Nielsen. ‘A Cross-Country Comparison of Policies to
Strengthen Diaspora Investment and Entrepreneurship’, Realizing the Potential of
Diasporas to Reduce Poverty and Enhance Development, edited by Krishnan
Sharma, Arun Kashyap, Manuel Montes and Paul Ladd, 230-252. Tokyo: United
Nations University Press, 2011.
Safran, William. ‘Diasporas in Modern Societies: Myths of Homeland and Return’.
Diaspora: A Journal of Transnational Studies 1.1 (1991): 83-99.
Saxenian, AnnaLee. ‘Transnational Communities and the Evolution of Global
Production Networks: The Cases of Taiwan, China and India’. Industry and
Innovation 9.3 (2002a): 183-202.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
26
27
__________________________________________________________________
Saxenian, AnnaLee. ‘Silicon Valley’s New Immigrant High-Growth
Entrepreneurs’. Economic Development Quarterly 16.1 (2002b): 20-31.
Schommers, Amrei. ‘Diaspora: Wie kann sie zur Entwicklung der Herkunftsländer
beitragen?’ Cronnect, 1(2013): 6-8.
Silbereisen, Rainer K. ‘New Research on Acculturation among Diaspora
Migrants’. International Journal of Psychology 43.1 (2008): 2-5.
Smart, Alan and Jinn-Yuh Hsu. ‘The Chinese Diaspora, Foreign Investment and
Economic Development in China’. The Review of International Affairs 3.4 (2004):
544-566.
Terrazas, Aaron. Diaspora Investment in Developing and Emerging Country
Capital Markets: Patterns and Prospects. Diasporas: New Partners in Global
Development Policy (Migration Policy Institute, Washington, DC, 2010) D, 9.
2010
Tung, Rosalie. L. ‘Brain Circulation, Diaspora, and International Competitiveness’.
European Management Journal 26.5 (2008): 298-304.
Usher, Erica. The Millennium Development Goals and Migration (No. 20). New
York: United Nations Publications, 2005.
Vaaler, Paul. M. ‘Diaspora Concentration and the Venture Investment Impact of
Remittances’. Journal of International Management 19.1 (2013): 26–46.
Vissak, Tiia and Xioation Zhang. Chinese Immigrant Entrepreneurs’ Involvement
in Internationalization and Innovation: Three Canadian Cases’. Journal of
International Entrepreneurship 12.2 (2014): 183-201.
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Gains: Harnessing the Resources of Overseas Professionals. Washington DC:
Asian Development Bank, 2006.
Maria Elo holds a PhD in Economics, Åbo Akademi University, Finland. She is a
post-doctoral researcher at Turku School of Economics, Finland and a Migration
Fellow at the Institute of Migration. She is the founder and leader of the Diaspora
Networks in International Business- research platform. Her research focuses on
international business and diaspora. Her work is published in books and journals,
such as Industrial Marketing Management.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Maria Elo and Liesl Riddle
Understanding Diaspora Investment
__________________________________________________________________
Liesl Riddle is an Associate Professor of International Business and International
Affairs, The George Washington University, USA. Since 2006, she has led the GW
Diaspora Capital Investment Project, which generates and disseminates learning
about diaspora investment and its role in development to assist private-sector firms,
policymakers, diaspora organizations, diaspora entrepreneurs, and researchers. She
consults on diaspora engagement-related issues for international organizations and
government agencies, such as the United Nations, the World Bank, and USAID,
and for private-sector clients, including Western Union.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
28
Indianna D. Minto-Coy
Abstract
Increasing light is being shun on the role that diasporas and migrants play in
helping to create businesses in their adopted countries. This marks some progress
in research and practice away from a deterministic view of diasporas and migrants
as agents that are acted upon (e.g. by receiving or adopted country government
policies or the very push and pull factors that lead to their creation). This more
dynamic depiction paints diasporas as active and purposive transnational agents, a
perspective not necessarily facilitated in traditional international business
literature. Nonetheless, this emerging body of work still tends to ignore the role
that Diasporas play in helping businesses in countries of origin to grow and
internationalise. In this way, what has often in the past been framed in a negative
(e.g. Migration and the formation of global diasporas as indications of brain drain
or chiefly as a concern of sociologists/anthropologists) can be constructed in a
more nuanced way, with diasporas providing a ready market and network for
home-based firms wanting to enter foreign markets. The implications for exports,
productivity and ultimately, national growth are not to be underestimated,
particularly in those societies with notable levels of migration. The main question
guiding the chapter is: what is the role of diasporas in the growth and
internationalisation of businesses from countries of origin? The chapter suggests
the diaspora as a key resource and route towards participation and enhanced
competitiveness in the global economy for firms originating in countries of origin.
This is particularly useful for businesses generally, but more specifically for firms
from small and developing nations who have traditionally found it difficult to
internationalise, diversify and identify ‘new’ markets.
Key Words: Diasporas, business, internationalisation, diaspora business, diaspora
in business, international business, multinational enterprise, growth, development,
Caribbean, developing.
*****
1. Introduction
Increasing light is being shun on the role of diasporas and migrants in helping
to create businesses in their adopted countries.1 This marks some progress in
research and practice away from a deterministic view of these groups as actors that
are acted upon. This more dynamic depiction paints diasporas as purposive
transnational agents, a perspective not necessarily facilitated in traditional
international business literature.2 Nonetheless, this emerging body of work still
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
The Role of Diasporas in the Growth and Internationalisation of
Businesses in Countries of Origin
__________________________________________________________________
tends to ignore the role that Diasporas play in helping businesses in countries of
origin to grow and internationalise. The latter is a more nuanced view of diasporas
who provide a ready market and network for home-based firms wanting to enter
foreign markets.3
The main question guiding the chapter is: what is the role of Diasporas in the
growth and internationalisation of businesses from countries of origin? The chapter
suggests the diaspora as a key resource and route towards participation and
enhanced competitiveness in the global economy for firms originating in countries
of origin. This is particularly useful for businesses generally, but more specifically
for firms from small and developing nations who have traditionally found it
difficult to grow, internationalise and diversify into new markets.4
In making this case, the chapter is organised as follows, the conceptual
framework is outlined in Section 2; Section 3 reviews the methodology, while the
case study is presented in Section 4; Sections 5 and 6 include the analysis and the
limits and wider implications of the study.
A few guides are necessary at this juncture. The perspective espoused here of
Diaspora in Business and Diaspora Business relates to businesses started by
persons based in the diaspora;5 where the diaspora is the target market for a
business based in the adopted country;6 or alternatively, where the diaspora is the
market and route to internationalisation for a business started in the home country.
The focus of this chapter is decidedly on the latter. For further definitional
purposes (and accepting that this term is not without contention),7 ‘diasporas’
refers to the dispersal of a people from their original homeland.8 ‘Diaspora’ (i.e.
capital ‘D’) will be used to refer to a specific (i.e. co-ethnic or national) grouping.
2. Conceptual Framework
Internationalisation here is taken to mean the increased involvement of a
business enterprise in international operations.9 Nevertheless, it is accepted that
there is no one precise definition and that the term is used in a number of settings,
including education and marketing.10 The strength of the internationalisation
literature here is that it offers an entry point given its focus on entry strategies,
survival and expansion of businesses from one local into another.11 In particular,
one stream of this literature, Liability of Foreignness (LOF), acknowledges that
multinational enterprises face a number of challenges in accessing foreign markets
and in turn, focuses on the strategies that they may adopt in overcoming these.12
Elango13 e.g. considers the role of prior knowledge and branding in overcoming
LOFs. Much of this prior knowledge can in fact be secured where the market is
ethnically based, from the same country as the internationalised enterprise and
where the diaspora, given links with the home country, already have brand
awareness. As transnational actors then, diasporas provide a ready market, which
reduces distance (symbolically and culturally), providing a route to overcoming
LOF challenges.
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30 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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Even so, the international business literature has been very slow in
acknowledging one of the most profound and influential phenomenon of modern
existence, migration and the resulting diaspora population in the adopted country
or country of residence (COR). In so doing, the literature largely ignores the
emerging role of these actors in the growth and internationalisation of firms from
the COO (country of origin). Indeed, the diaspora offers MNEs access and
legitimacy in foreign markets that is not necessarily accommodated in established
trade and internationalisation theories; a sentiment echoed by others who frame
their discourse in terms of ethnic ties.14 However, where for instance, Jean focuses
on location decisions between China and Taiwan where there has been a historical
and contemporary link,15 it is also interesting to see how ethnic ties in the form of
diaspora linkages feature in less obvious cases and in more diverse settings such as
in North America, and involving firms from emerging and smaller markets such as
the Caribbean. Furthermore, gaining a foothold in foreign markets is seen as
problematic especially for firms from emerging and small economies, due to
factors such as information barriers and the absence of networks to access
information and other resources for overcoming LOFs.16 To this end, the diaspora
can inform the decision of where to locate, while its actual size and/or power and
brand strength and loyalty among this group can determine the extent of success
vis-a-vis similar products or services in the market upon entry.
Network theory, particularly the focus on strength of ties is also relevant. That
is, ‘how interaction in small groups aggregates to form large scale patterns...
(which), in turn, feed back into small groups’17 with diasporas being examples of
such small groups defined by specific traits which determine how they engage
internally and among non-members. Diasporic skills, resources and experiences
can be important informants of home-based firms given their knowledge of the
business and political cultures in the homeland and adopted countries.18 Here the
diaspora function as marketers, brand or trade ambassadors19 forging links between
the COO and COR with direct benefit to home-based MNEs.
Network analysis also provides some indication of the limits to the role of
diasporas in internationalisation20 Where diaspora networks represent a close and
closed group the suggestion is that too strong an emersion internally can result in
low-innovation capacity/-growth/-profits/-survival and limit ability to identify new
markets and information. Diasporas are seen as a ready market to facilitate entry,
initial business information, contacts and sales. The MNE will have to find ways of
expanding beyond its ethnic group, where the goal is expansion and increased
value, even morphing its identity in order to appeal to a wider market. To this end
though, the focus on relationships in internationalisation research and social
network analysis have tended to be on formal or business networks with
insufficient coverage of the role of ethnic ties or the interpersonal on strategic
performance and decision-making.21
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The inclusion of diasporas in discussions on overcoming LOF adds to the
explanatory power of internationalisation theories helping to advance its ability to
address evolving scenarios in international business. This work, therefore, sits at
the boundary of international business and diaspora studies, suggesting once more
the relevance of cross-disciplinary and multi-perspective studies in advancing the
social sciences. It further contributes to the literature by adding empirical findings
on the internationalisation of MNEs from developing, and particularly small
developing countries and their strategies for increasing market space and reach
beyond size and geography. Additionally, the study asserts the role of ethnic ties
and informal networks22 in business growth and internationalisation.
3. Methodology
This exploratory qualitative study is based on a case study of a Jamaican MNE
with data being collated from interviews with key company officials and desk
research. Jamaica offers a good case study for a number of reasons, including the
size and value of the diaspora to that economy with the government moving to
frame national migration and diaspora policies to mainstream their role national
development.23
Whereas Zaheer, et al24 see ethnic ties as spanning a number of parameters (e.g.
mother tongue or ethnic group), the focus of the present study is on a specific
feature of ethnicity, in this case – national origin via the diaspora. The focus on
nationality, as opposed to say ethnicity is important given the multiple racial and
ethnic groups that typify Jamaica and other Caribbean states.25
4. Presentation and Discussion of Case
The Emergence of JNBS
In 1874, Jamaica National Building Society (JNBS), then the Westmoreland
Building Society, started as a small rural-based operation aimed at facilitating
home ownership.26 Through a series of mergers with other rural-based building
societies,27 the firm officially became JNBS in December 1970. Further mergers
saw the firm branching from its rural base into the country’s capital.28 From its
rural state, the company mushroomed to become one of the island’s and the
Diaspora’s most trusted and the third largest financial institution in Jamaica, along
the way creating a brand that has come to be recognised as the go-to building
society for Jamaicans at home. JNBS’s accomplishments in facilitating savings and
home-ownership among poor and rural folk provided a link between building
societies and rural Jamaicans, identifying the former as trusted partners in
delivering financial services and inclusion.
Internationalisation and Growth of JNBS
JNBS’s growth locally was helped by the movement of many of clients from
rural to urban areas. Internal migration of the company and its clients naturally
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32 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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followed the further move from Jamaica into global cities, as Jamaicans migrated
in search of opportunities elsewhere. It is interesting to note, that with the first
notable wave of mass migrants from Jamaica were largely from rural parishes
where the firm had its early beginnings (e.g. St. James and Manchester) into
London. The embedding of the ‘building society’, over the years as a trusted,
inclusive, grass roots institution given its early beginnings has also been retained
among the majority of Jamaicans as they migrated overseas. Minto-Coy discusses
the major migratory patterns and the emergence of the Jamaican Diaspora, firstly to
the UK, given the historical linkages and then to developed countries such as the
US and Canada.29
It is therefore, not coincidence that one of the firm’s first base of operations
overseas was in the UK. This came in the early 1990s when JNBS opened its first
branch in London. Interestingly too, a look at the locations of the firm’s operations
demonstrates the link between the Diaspora and JNBS with branches being located
in global cities with a strong Jamaican population. For instance, in the UK, JNBS
offices are located in places such as Brixton, Elephant & Castle in London and in
other major Jamaican locations in Birmingham and Manchester.
Recognising the importance of the remittancing market, JN was the first
financial institution based in Jamaica to offer remittance services in the UK,
extending to the US and Canada and later into other countries.30 Through its
activities in the diasporic economy, it is now a net exporter via services such as the
lucrative money transfer market, savings accounts (accounts are held in Jamaica),
as well as the provision of jobs to Jamaicans.31 The company has since branched
out into mortgages and real estate services for the Diaspora as well as insurance.
Thus, as the firm has begun to cement its place in traditional areas, it has also
sought to branch out into new services.
Expansion beyond the Diaspora
Expansion has continued with its operations facilitating not only north-south
but increasingly south-south trade as seen in its expansion into Ghana and other
Caribbean territories. Again, the role of diasporas stands out here with many of the
markets entered being among those that the Diaspora have in recent years moved
into. Thus, whereas, migration within the Caribbean and Latin American region32 is
not a recent phenomenon, the economic success of neighbouring CARICOM
territories vis-a-vis Jamaica has seen increased economic migration of Jamaicans
within the region. JNBS has therefore, moved to provide financial services in
places such as the Cayman Islands.
Expansion into non-Jamaican but related ethnic markets has also come with
JNBS offering remittance services from its Diaspora locations to other Caribbean
islands and Africa, now being twice internationalised. Subsequently, JNBS now
has over 150 agents and 20 branches across the UK, US, Canada, Ghana, and
Caribbean islands of Grand Cayman, Dominica, St Vincent and the Grenadines.33
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33
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This thrust towards further internationalisation has occurred even as it seeks to
retain some of its orientation and appeal within the Jamaican Diaspora as its firm
base. These related groups are also strategically located in communities where
Jamaicans reside.34 JNBS has also expanded its networking with other branded
COO-based businesses in Diaspora locations, e.g. Courts (furniture and
appliances). Such partnerships allow JNBS to capitalise off their partner’s network
while reducing operational costs.
5. Analysis
The study sought to understand the role of diasporas in the internationalisation
and growth of firms from the country of origin. In so doing, it has sought to add to
the Internationalisation literature in the context of the under coverage of diasporas
and ethnic ties in the growth and internationalisation of businesses from countries
of origin.
Drawing specifically on the focus on LoFs and social network theory the study
focused on a study of a Jamaican MNE revealing that firms do use the location of
their diaspora markets to inform their internationalisation with the main locations
of the branches and subsidiaries being based in global Jamaican Diaspora
locations. However, as the firm became entrenched in the Diaspora market it then
sought to diversify its services as well as clientele, becoming twice
internationalised as it used its operations in the Jamaican Diaspora market to
appeal to other diaspora groups and offer services to their COOs.
The presentation demonstrates the transnational flow of business with
migration presented not as an end but a continuum. Here relations with the home
country are not broken and this is true not only in a social sense but in business,
with the diaspora providing a transnational market and other opportunities for
home-based businesses. As suggested elsewhere by Minto-Coy developments in
the diasporic economy are among some of the most innovative and promising. This
is as it relates to entrepreneurship and innovation around diaspora
business/diaspora in business with some of the firms operating in this area being
among of the most innovative and successful enterprises in countries such as
Jamaica and Guyana.35
The implications of the study are numerous. According to the literature,
entrepreneurs or enterprises that choose to internationalise tend to understand
international cultures and have a global mind-set. However, the suggestion here is
that there is a place for home/local culture in internationalisation, since it is
knowledge of this culture that informs access to the diaspora markets in the host
country. At a practical or policy level, the strategies of enterprises operating in the
diaspora market or economy can be informed by the fact that national culture is not
confined locally but has transnational and international business implications,
especially when translated into tangible products and services. Further whereas
presentations on ethnic businesses have focused largely on food, this chapter has
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34 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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focused on financial services showing that Diaspora business/Diaspora in business
is more diverse and go well into traditional and emerging services.36 For managers
and MNEs, the study demonstrates the importance of the emerging diaspora market
as a key market and tool in overcoming LOFs and other problems associated with
growth and internationalisation, extending understanding of success factors for
internationalization and overcoming LOFs. There are general implications for
businesses but specifically for those in small and developing countries. In this way,
the diaspora and COO-based businesses engage in a sustained transnational
business engagement, which defies movement, space and size of the COO.
Importantly too, while there is need to focus on strategies beyond the diaspora
market to sustain growth, the reality is that the diaspora also offers a route for
growth into other ethnic markets with strong ties not necessarily being a limiting
factor, if there is a desire to expand. On the other hand, the suggestion too is that it
may not simply be about the strength of networks but from the perspective of the
stages theory of internationalisation, the sequencing of the ties may be important.
Here strong ties are necessary in the early stages of internationalisation,
particularly in gaining a footing in the diaspora community, coalescing support and
gaining brand awareness. Once this has been accomplished it is easier to build on
these ties launching out into other markets.37 The suggestion here is that firms
operating in the diaspora market can in fact innovate within and beyond their close
ethnic ties with the diaspora market remaining critical even after market entry and
expansion beyond the diaspora.38
These implications not only resonate at the firm or industry level but also
nationally. As shown in the country case presented, in the constant search for
productivity and growth, much potential has been recognized in terms of engaging
diasporas for development.39 The findings provide tangible evidence for these
assumptions but importantly in a more nuanced view to that which has tended to
dominate the literature on diasporas and migration. Namely, there is much business
benefit to migration and not only for the COR but the COO. Benefits extend
beyond remittancing or philanthropic donations to the COO. For countries with a
relatively strong or connected diaspora, the diasporic economy offers a means for
exports and hence the lifting of national incomes and productivity. Indeed, the
point is that national diaspora policies and engagement strategies should be
informed by these findings on opportunities for investments, entrepreneurship and
the growth and internationalisation of businesses.40 In this way, diasporic
engagement can become the new frontier in global competitiveness for small and
developing states.41
The chapter is even more relevant in the contemporary context of increasing
migration and diasporas and the transnational flow of persons, capital and
opportunities. These findings are in keeping with observations on the business
effect of the Indian and Chinese Diaspora and the role of diasporas as markets,
marketers, networkers and collaborators for COO-based businesses.42 These latter
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35
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considerations extend well-beyond the traditional focus and location of migration
and diaspora studies in political science, history and sociology to demonstrate the
business and economic impact of diasporas and migrants, while linking research on
LOF and social network theory to diaspora and migration studies.
6. Limitations and Future Research
The diaspora market is mainly a point of entry and assistance in accessing the
market. While there is evidence that the diaspora also helps in brokering new
relations, it is still clear that there are limits to any strategy based solely on the
diaspora market. This is at a practical level given the size of the diaspora vis-a-vis
other diaspora groups and the native population. It is clear then the diaspora is a
gateway as opposed to simply an end market for any COO-based MNE wishing to
sustain growth, and continue to deliver value to shareholders, generally. What the
work has done, however, is to show the value of diasporas as networkers, brokers
and launching pad for COO-based businesses.
Nevertheless, the study and the validity of its findings, as well as implications
for theory could also be advanced by the addition of more cases and a quantitative
approach. Further triangulation would also help to enhance the robustness of the
findings of this exploratory study.
Notes
1
For example, Rebecca Burn-Callander, ‘Migrant Entrepreneurs Driving Job
Creation Across Britain, Study Shows’, The Daily Telegraph, 4 March 2014, np.
Viewed 15 August 2015.
http://www.telegraph.co.uk/finance/businessclub/10676632/Migrant-entrepreneursdriving-job-creation-across-Britain-study-shows.html; Indianna D. Minto-Coy,
‘Diaspora Engagement for Development in the Caribbean’, Diasporas,
Development and Governance in the Global South, ed. Abel Chikanda, Jonathan
Crush and Margaret Walton-Roberts (New York: Springer, 2016); Robert
Kloosterman, ‘Matching Opportunities with Resources: A Framework for
Analysing (Migrant) Entrepreneurship from a Mixed Embeddedness Perspective’,
Entrepreneurship & Regional Development 22.1 (2010): 25-45; Robert
Kloosterman and Jan Rath, ‘Immigrant Entrepreneurs in Advanced Economies:
Mixed Embeddedness Further Explored’, Journal of Ethnic and Migration Studies
27.2 (2001): 189-201.
2
That is for instance, diasporas and migrants simply as actors affected by receiving
or adopted country policies or the very push and pull factors that lead to their
creation. To this end some authors have sought to present a more proactive view of
diasporas as a more purposive grouping, generally and in international business.
See e.g. Indianna D. Minto-Coy, ‘Beyond Remittancing: An Investigation of the
Role of Telecoms in Facilitating and Extending the Diaspora’s Contribution to the
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36 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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Caribbean’, Canadian Foreign Policy Journal 17.2 (2011): 129-141 and ‘Diaspora
Engagement’, 121-139; Liesl Riddle and Jennifer Brinkerhoff, ‘Diaspora
Entrepreneurs as Institutional Change Agents: The Case of Thamel.com’,
International Business Review 20 (2011): 670-680; Liesl Riddle, George A.
Hrivnak and Tjai M. Nielsen, ‘Transnational Diaspora Entrepreneurship in
Emerging Markets: Bridging Institutional Divides’, Journal of International
Management 16.4 (2010): 398-411;. Also see Maria Elo’s excellent review –
“Diaspora Networks in International Business and Transnational Entrepreneurship
– A Literature Review”, ZenTra Working Paper Series in Transnational Studies, 20
(2014): 1-18.
3
Such a presentation defies some of the negative framings that have sometimes
defined diasporas as a movement and as seen in the connotations of brain drain or
even of migration and diasporas studies as mainly concerns of sociologists/
anthropologists. Brinkerhoff and Riddle’s
4
For example, Kale suggests that MNEs from developing countries face
disadvantages vis-a-vis those from developed countries, including outdate
technology, and limited knowledge of overseas markets. See Dinar Kale,
Internationalisation Strategies of Indian Pharmaceutical Firms, Milton Keynes,
(UK: Open University, 2007), 7.
5
See e.g. Minto-Coy, ‘Beyond Remittancing’, 129-141; ‘The History of Public
Administration in the Commonwealth Caribbean’, Public Administration & Policy
in the Caribbean, ed. Indianna D. Minto-Coy & Evan Berman (New York: CRC
Press/Taylor and Francis, 2016); Indianna Minto-Coy, ‘A Critical Analysis of
Diasporic Engagement for Development in the Caribbean’ (paper presentation at
the Diasporas, Development and Governance in the Global South Conference,
Waterloo, Canada, May 26-28, 2013a.
6
The growth of the calling card industry in countries such as the UK is an example
of this, with a number of calling card companies and retailers emerging over the
years to supply the demand for cheaper telecommunications by migrants and the
diaspora (see Minto-Coy, ‘Beyond Remittancing’, 133).
7
Cohen gives an excellent review of the history and evolution of the word
‘diaspora’. See Robin Cohen, ‘Diasporas and the Nation-State: From Victims to
Challengers’, International Affairs 72.3 (1996): 507-520.
8
Kim Butler, ‘Defining Diaspora: Refining a Discourse’, Diaspora: A Journal of
Transnational Studies 10.2 (2001), 189. Of course, the suggestion of dispersal
intimates ‘unplanned’ or ‘forced’ but this is far from the case in the modern sense,
where globalisation has opened the routes for voluntary migration, even as the
earlier meaning remains relevant for many.
9
Similar to Beamish’s definition of internationalisation. See Paul W. Beamish,
‘The Internationalisation Process for Smaller Ontario Firms: A Research Agenda’,
Research in Global Strategic Management - International Business Research for
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
37
__________________________________________________________________
the Twenty-First Century: Canada's New Research Agenda, edited by A.M.
Rugman, (Greenwich: JAI Press Inc. 1990), 77-92.
10
Of course, the suggestion of dispersal intimates unplanned or forced but this is
far from the case in the modern sense, where globalisation has opened the routes
for voluntary migration, even as the earlier meaning remain relevant for many.
11
For instance, the Uppsala model notes that firms gain experience in the home
market before entering other more distant and culturally open markets.
12
See Stephen Hymer, The International Operations of National Firms: A Study
of Direct Investment (Cambridge, MA: MIT Press, 1976); Paul Taylor, ‘The Effect
of Entrepreneurial Orientation on the Internationalisation of SMEs in Developing
Countries’, African Journal of Business Management, 7.19 (2013): 1927-1937;
Srilata Zaheer, ‘Overcoming the Liability of Foreignness’, Academy of
Management Journal 38.2 (1995): 341-363.
13
B. Elango, ‘Minimising Effects of ‘Liability of Foreignness’: Response
Strategies of Foreign Firms in the United States’, Journal of World Business, 44
(2009): 51-62.
14
See, S. Zaheer, A. Lamin, and M. Subramani, ‘Cluster Capabilities or Ethnic
Ties: Location Choice by Foreign and Domestic Entrants in the Services
Offshoring Industry in India’, Journal of International Business Studies 40.6
(2009): 944–968; Ruey-Jer Jean, Danchi Tan and Rudolph R. Sinkovics, ‘Ethnic
Ties, Location Choice and Firm Performance in Foreign Direct Investment: A
Study of Taiwanese Business Groups’ FDI in China’, International Business
Review 20.6 (2011): 627-635; K. R. Xin and J.L. Pearce, ‘Guanxi: Connections as
Substitutes for Formal Institutional Support’, Academy of Management Journal,
39.6 (1996): 1641-58.
15
See Jean, Tan and Sinkovics, Ethnic Ties.
16
Stinchcombe (1965).
17
Mark Granovetter, ‘The Strength of Weak Ties’, American Journal of Sociology,
78.6 (1973): 1360.
18
For some support for this point see Lars Agnarson, The Magic of Diasporas:
Briefing the Benefits of Migration (2014), viewed 12 July 2015,
http://www.diasporas.se/images/papers/magicdiasporas.pdf
19
Indianna D. Minto-Coy, The Draft Jamaica Diaspora Policy, Paper prepared for
the Government of Jamaica to guide the production of the National Diaspora
Policy (2013b) & Lars, Magic of Diasporas.
20
Burt, (1997).
21
As noted by Jean, Tan and Sinkovics, ‘Ethnic Ties’, 629.
22
Ibid.
23
The size of the Diaspora vis-a-vis the local population is also another major
point with unofficial estimates suggesting the Diaspora is roughly the same size
(2.7 million) as the local population. The role of the transnational population has
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38 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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also increased in the context of a stagnant economy, the rising contribution of
remittancing and Diaspora investments to the economy, the difficulties for local
firms competing with larger more resourced firms as well as the sustained
difficulty of these firms in internationalising into regional and international
markets. For a review of the main concerns and data on diasporas and migration in
the Jamaican and Caribbean context see Indianna Minto, ‘Diasporas and
Development – The Cases of Ireland and the Caribbean’, Caribbean Paper #7,
(Waterloo, Canada: Centre for International Governance Innovation, 2009);
Indianna Minto-Coy, ‘The Impact of the Global Financial Crisis on Remittancing’,
What Others Manifest? The World Economy in the Theoretical Turbulence of the
Global Financial Crisis
-18; ‘Diaspora Engagement’; ‘The
Draft Jamaica Diaspora Policy’.
24
Zaheer, Lamin, and Subramani, ‘Cluster Capabilities’, 944–968
25
See note 22.
26
A decade earlier, the building society concept was encouraged to facilitate home
ownership among poor and middle class Jamaicans with an 1865 Act for the
regulation and encouragement of Benefit Building Societies providing the legal
framing for JNBS.
27
These were in the parishes of St James, Manchester and St Ann.
28
Mergers saw the firm taking on operations in the parishes of St Thomas, St Mary
and Hanover and the capital city of Kingston. See History of Jamaica National
Building Society, nd, viewed 10 June 2015, http://www.jnbs.com/about.
29
See Minto-Coy, ‘Diasporas and Development’; ‘Impact of the Global Financial
Crisis’; ‘Beyond Remittancing’; ‘Diaspora Engagement for this and further
background on the migration of Caribbean and Jamaican nationals.
30
The previous experience of Jamaicans remitting money earned from assistance in
the building of the Panama Canal (See James Moss-Solomon, Jamaica and Grace
Kennedy: Dreams Converging, Roads Diverging, The Grace Kennedy Foundation
Lecture (Kingston, Jamaica: Grace Kennedy & Company Limited, 2012), 26) is an
early indicator of an appetite and desire among the Diaspora and migrants and an
indicator of likely success of remittancing service. This is especially so given the
importance of economic explanations as drivers for migration in Jamaica and many
other Caribbean islands. See
31
For instance, many of its overseas locations are staffed by workers from various
branches at home. Additionally, members of the Diaspora themselves are employed
in the respective branches around the world.
32
For instance, Jamaicans were instrumental in the building of the Panama Canal.
See Moss-Solomon, Jamaica and Grace Kennedy
33
Jamaica National Building Society, Our Members Are Everything: Jamaica
National Director’s Report and Financial Statements, 2008 (Kingston, Jamaica:
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39
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Jamaica National Building Society, 2008: 17 and 32).
Many Jamaicans, Ghanaians and other Caribbean nationals in the UK, e.g. live
within the same or neighbouring communities and have also intermarried with
claims of historical ancestry helping to kindle some of these ties and ease coexistence.
35
See Minto-Coy, ‘Diaspora Engagement’.
36
Traditional service here relate to financial services. Note too that JNBS’s
competitors include the giant Western Union.
37
JNBS expanding its image beyond a national to a regional and global diaspora is
an illustration of this point.
38
In so doing, the work goes beyond that of authors such as Jean, Tan and
Sinkovics. ‘Ethnic Ties’ who found that ethnic ties did not matter for performance
beyond firm entry in the foreign market.
39
Minto-Coy ‘Beyond Remittancing; ‘Engaging the Caribbean Diaspora’; ‘Public
Administration in the Commonwealth’.
40
Ibid.
41
Minto-Coy, ‘Engaging the Caribbean Diaspora’.
42
For coverage of the role of the Indian and Chinese Diaspora in the creation and
expansion of businesses from and into these countries see The Economist (2011)
and for the typology of the roles of the diaspora see Minto-Coy, ‘Jamaica Diaspora
Policy’ & ‘Diaspora Engagement’.
34
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Burn-Callander, Rebecca. ‘Migrant Entrepreneurs Driving Job Creation Across
Britain, Study Shows’. The Daily Telegraph, 4 March 2014. Viewed 15 August.
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Butler, Kim. ‘Defining Diaspora: Refining a Discourse’. Diaspora: A Journal of
Transnational Studies 10.2 (2001): 189-219
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Indianna D. Minto-Coy
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Cohen, Robin. ‘Diasporas and the Nation-State: From Victims to Challengers’.
International Affairs 72.3 (1996): 507-520.
Elango, B. ‘Minimising Effects of ‘Liability of Foreignness’: Response Strategies
of Foreign Firms in the United States’. Journal of World Business 44 (2009): 5162.
Elo, Maria. “Diaspora Networks in International Business and Transnational
Entrepreneurship – A Literature Review’. ZenTra Working Paper Series in
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Granovetter, Mark. ‘The Strength of Weak Ties’. American Journal of Sociology
78.6 (1973): 1360-1380.
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Hymer, Stephen. The International Operations of National Firms: A Study of
Direct Investment. Cambridge, MA: MIT Press, 1976.
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National Director’s Report and Financial Statements, 2008. Kingston, Jamaica:
Jamaica National Building Society, 2008.
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Choice and Firm Performance in Foreign Direct Investment: A Study of Taiwanese
Business Groups’ FDI in China’. International Business Review 20.6 (2011): 627635.
Kale, Dinar. Internationalisation Strategies of Indian Pharmaceutical Firms,
Milton Keynes, UK: Open University, 2007.
Kloosterman, Robert. ‘Matching Opportunities with Resources: A Framework for
Analysing (Migrant) Entrepreneurship from a Mixed Embeddedness Perspective’.
Entrepreneurship & Regional Development 22.1 (2010): 25-45
Kloosterman, Robert & Jan Rath. ‘Immigrant Entrepreneurs in Advanced
Economies: Mixed Embeddedness Further Explored’. Journal of Ethnic and
Migration Studies 27.2 (2001): 189-201.
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Minto, Indianna D. ‘Diasporas and Development – The Case of Ireland and the
Caribbean’. Caribbean Paper #7, Waterloo. Canada: Centre for International
Governance Innovation, 2009.
———. ‘The History of Public Administration in the Commonwealth Caribbean’,
Public Administration & Policy in the Caribbean, edited by Indianna D. MintoCoy and Evan Berman, 33-60. New York: CRC Press/Taylor and Francis, 2016a.
———. ‘Diaspora Engagement for Development in the Caribbean’. Diasporas,
Development and Governance in the Global South, edited by Abel Chikanda,
Jonathan Crush and Margaret Walton-Roberts, 121-139. New York: Springer,
2016b.
———. ‘A Critical Analysis of Diasporic Engagement for Development in the
Caribbean’. Paper presented at the Diasporas, Development and Governance in the
Global South Conference, Waterloo, Canada, May 28, 2013a
———. ‘The Draft Jamaica Diaspora Policy’, Paper prepared for the Government
of Jamaica to guide the production of the National Diaspora Policy, 2013b.
———. ‘Beyond Remittancing: An Investigation of the Role of Telecoms in
Facilitating and Extending the Diaspora’s Contribution to the Caribbean’.
Canadian Foreign Policy Journal 17.2 (2011): 129-141.
———. ‘The Impact of the Global Financial Crisis on Remittancing’. What Others
Manifest? The World Economy in the Theoretical Turbulence of the Global
Financial Crisis
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Moss-Solomon, James. Jamaica and Grace Kennedy: Dreams Converging, Roads
Diverging, The Grace Kennedy Foundation Lecture. Kingston, Jamaica: Grace
Kennedy & Company Limited, 2012.
Liesl Riddle and Jennifer Brinkerhoff. ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’. International Business Review 20
(2011): 670-680.
Liesl Riddle, George A. Hrivnak and Tjai M. Nielsen. ‘Transnational Diaspora
Entrepreneurship in Emerging Markets: Bridging Institutional Divides’. Journal of
International Management 16.4 (2010): 398-411.
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42 The Role of Diasporas in the Growth and Internationalisation of Businesses
Indianna D. Minto-Coy
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Taylor, Paul. ‘The Effect of Entrepreneurial Orientation on the Internationalisation
of SMEs in Developing Countries’. African Journal of Business Management 7.19
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Institutional Support’. Academy of Management Journal 39.6 (1996): 1641-58.
Zaheer, Srilata. ‘Overcoming the Liability of Foreignness’, Academy of
Management Journal 38.2 (1995): 341-363
Zaheer, S., A. Lamin, and M. Subramani. ‘Cluster Capabilities or Ethnic Ties:
Location Choice by Foreign and Domestic Entrants in the Services Offshoring
Industry in India’, Journal of International Business Studies 40.6 (2009): 944–968
Indianna D. Minto-Coy is Senior Research Fellow at the Mona School of
Business and Management, University of the West Indies and a research affiliate at
the International Migration Research Centre at Wilfrid Laurier University, Canada.
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43
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Diaspora Entrepreneurship and Internationalization
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Part II
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Arnim Decker
Abstract
To contribute for an improved understanding of transnational entrepreneurship as
an area of interest, we conducted a single case study of a Romanian TE with a base
in France. We found that through a specific combination of resources the
transnational entrepreneur was able to profit from specialized local technological
knowledge in his home country and then leveraged relevant resources in the host
country. While the transnational entrepreneur founded a firm in the home country,
he kept residency in the host country to develop new customer relationships.
Subsequently the entrepreneur internationalized his firm and expanded into new
business activities. Taking this case as an example, we discuss how transnational
entrepreneurs can create and leverage resources to create sustainable competitive
advantage. Moreover, this case depicts a form of internationalization which differs
from those typically discussed in the literature about international new ventures. I
argue that study of transnational entrepreneurs and international new ventures in
general can profit from a better understanding of diversity found in transnational
entrepreneurship. The way a transnational entrepreneur recognizes patterns to
identify business opportunities seems to differ when compared to indigenous
entrepreneurs.
Key Words: Transnational entrepreneurship, international entrepreneurship,
internationalization, transition economy, social capital.
*****
1. Introduction
There is ample research on why and how firms internationalize. From a
behavioural perspective it has been found that experience determines the speed and
scope of firm’s internationalization process.1 Other researchers have argued that
not all firm internationalize gradually, going to psychologically close markets only
once they have established a solid foothold in their home markets. The concept of
international entrepreneurship2 as well as INV or International New Ventures3 is
associated with commercially oriented activities of individuals that move their
firm’s activities outside their home countries borders, where home country
conditions affect a firm’s path of development. The new venture theory of
internationalization4 emphasizes the abilities of some entrepreneurs to see and take
advantage of opportunities that others are not able to perceive.5 For some of them
pursuing an internationalization strategy can be the right choice on the path to
success.
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Transnational Entrepreneurship and Opportunity Recognition
Transnational Entrepreneurship and Opportunity Recognition
__________________________________________________________________
2. Methodology and Organization of this Chapter
A case study analysis is used to discuss patterns of an international new venture
founded by a transnational entrepreneur (henceforth TE). Following a theoretical
discussion for conceptualizing the phenomenon of transnational entrepreneurship
in relation to social capital, I discuss internationalization of new ventures with a
perspective on TEs. I consider aspects of entrepreneurial exploration and business
opportunity recognition. To obtain data for this case study, I conducted a semistructured in depth interview with two senior managers from a Romanian firm
which lasted for about two hours. To complement these data, I also held several
interviews with institutional representatives, for example the dean of the local
university, a local cluster manager, and other business representatives who kindly
found time to speak with me. In addition, secondary sources to complement these
data will be taken into consideration.
3. Social Capital in the Context of Transnational Entrepreneurship
Apart from dealing with liability of foreignness6 on a daily basis, including in
their personal life, TEs are confronted with specific conditions of resource scarcity.
Challenges encountered by the TE can be overwhelming since they include the
need to handle and exploit diverse and continuously changing diverse social and
economic conditions including the creation, handling and combination of diversity
of networks and social structures. It has been suggested that transnational
entrepreneurs represent important transmission vehicles for the transfer of
organizational knowledge and technology between their home and host countries.7
Their special situation also enables them to leverage resources in way that is not
accessible to indigenous entrepreneurs. TEs profit from their dual position
allowing them to bridge between their home and hosts environment. TEs may lack
social capital8 that indigenous entrepreneurs are more likely to have at their
disposition. But on the other hand, they can compensate this deficiency by drawing
on social resources that the TEs still maintain with their country of origin.
Transnational entrepreneurs use personal contacts which they maintain within
diverse environments and can thereby utilize ethnic and structural resources
allowing them to pursue business activities in and between their host and home
countries9. From this perspective, available choices in terms of internationalization
behaviour10 are determined by the specific conditions of a TE, giving the duality
which is consequence of being connected both to the home and the host country.
The notion of social capital originates from the field of sociology, but is now
being increasingly utilized in field of economics and network analysis.11 Situated
between the opposites of markets structures which are either characterized by
perfect competition or monopolistic structures, competition based networks present
an alternative model.12 Closely linked to the notion of social networks, social
capital can be conceptualized as an array of social resources which are embedded
in network structures.13 Acting as nodes (similar to a physical network structure)
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individuals are linked to each other through connectors. In a social network,
personal relationships are represented by connectors who link nodes- these stand
for individuals- to each other. Thus individuals who know each other and interact
are also in connection to each other. In social network structures, information and
other resources flow through the pipes that connect individuals. These flows
provide network embedded individuals with specific benefits that expose them to
entrepreneurial opportunities.14
Figure 1: Being positioned between two networks provides special opportunities
for player A.
It is Ronald S. Burt who is credited with the conceptualization of structural
holes or structural voids. He observed that network structures are uneven and
characterized by zones that vary in their density.15 As opposed to financial or
human capital, social capital cannot be in the possession of one person alone.
Exclusive ownership of social capital is impossible, since it derives from network
connections between individuals. If one person withdraws from a relationship, the
connection between the two nodes ceases to exist. For a single individual, it is not
possible to maintain the connection, in consequence the circumstances specific
social capital disappears.
However, individuals in a network are connected in different ways, or not at all,
just like distance between nodes in a network varies. Sometimes, in between
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Arnim Decker
Transnational Entrepreneurship and Opportunity Recognition
__________________________________________________________________
connectors are sparse or do not exist, neither directly or indirectly. In these cases
there are said to exist structural holes which separate specific networks sections
from the rest.16 Structural holes provide special opportunities to individuals who
are able to identify and subsequently exploit them. If maintained and extended,
social capital can lead to competitive success. For example, an individual (or a
firm) in possession of a rich base of social capital has access to information and
resources leading to superior products and an ability to generate extra-normal
profit.
Structural voids offer specific opportunities to individuals when they are
adequately positioned. Structural voids occur as empty spaces between networks
that are not connected to each other. In each network, flows of information and
knowledge are freely circulating but they do not cross the boundaries. Since
between them networks are isolated, no information can flow from one network to
another. If an individual is positioned between these networks and connected to
both of them, the ability to channel diverse types of information creates
opportunities for profiting through arbitration or innovations. Individuals who are
positioned at the periphery of a network can create specific opportunities for
themselves which are not available to those who occupy more central positions.
Thus, being in a position at the margin of a network has certain disadvantages
because of a lower degree of embeddedness, but a peripheral position can also
result in distinctive advantages.
Social capital can be seen from two perspectives. From an individual
perspective a network provides access to information and knowledge, as well as
other types of resources. And secondly, networks can be seen as entities in their
own right. Here, social capital relates to resources that are embedded in existing
contacts as well as the structure of a network. A single network can vary in its
density where there may be spaces in between where density is low. In these
spaces few or sometimes even no connectors exist. Thus, frequently, information is
not evenly spread throughout the network structure and depending on the region in
the network, it can be of different quality. As can be observed in figure 1 above,
player A is positioned in a way that he can act as a connector between two
networks. Being in such a position opens up for arbitraging opportunities, since
quality of information and knowledge can differ substantially between otherwise
disconnected network segments. An individual can therefore act as a conduit and
profit from channeling information and other resources between two sections of the
network to his own advantage.
4. Case Study
For conducting my research, I have identified an individual who appears to be
in a condition to successfully leverage resources from two distinct environments. It
is a TE from Romania as home country with location of residence in France. This
person is still CEO of the firm he founded; he has a background as a computer
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engineer. As a native Romanian, he came to France after high school as he
received a scholarship to finance his studies at a school for computer engineering.
Initially, after completing his studies the TE found an employment at a French
company where he worked for a number of years. In this period, which lasted for
about seven years, he took responsibilities as a software developer, project
manager, program manager and similar tasks. In these positions, he was able to
learn about the specificities of the IT industry and built up personal relationships
which were later useful when he founded his company in 2005. He could start his
own operation when, by leveraging his personal social capital, he succeeded in
being awarded a contract from a large advertising and communication firm. The
TE took advantage of his native roots and arranged the technical work to be done
back in his native Romanian home town, where he had still maintained his personal
contacts throughout the time he was living in France. The TE exploited a window
of opportunity when during the peak of the then called dot-com bubble, it was
difficult to find competent computer programmers in the French market. However,
in Romania the TE could leverage his personal contact to identify and employ
individuals who were competent to work on the required tasks for a competitive
salary. In consequence, by receiving his first assignments in the country of
residence, the needed basis for establishing a company in the country of origin was
successfully established. Subsequently, the Romanian start-up company would
specialize on contract programming and related services like web page design. In
terms of technology employed, the start-up company did not engage in complex
development of new technologies, instead, a freely available open source based
scripting language was used. Although some technological understanding is
required, a lower degree of tacit understanding is required to handle the
technology. Nevertheless, it is powerful enough to support the creation of
dynamically generated websites and e-commerce solutions. As an outsourcing
provider for a French advertising agency as the first main customer, the newly
founded Romanian company leveraged the technology to develop websites for
promoting consumer oriented health care products. For creating more complicated
web-based applications like for example customer management systems, the
Romanian firm relied on similar technologies that were easy to use.
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Arnim Decker
Transnational Entrepreneurship and Opportunity Recognition
__________________________________________________________________
Figure 2: The transnational entrepreneur bridges the structural hole (or void)
between host and home country
Thus, specific technologies were beneficial for the development of the TE’s
business. While he could maintain and develop new customer contacts, lower
degree of tacit technological knowledge enabled the TE to act as a bridge between
his customers in Western Europe and the programmers back at home. The TE was
able to effectively convert the requirements of his customers into working
solutions by transferring information between the home and the host country.
Relatively low costs and availability of the technology employed also contributed
to the successful development of the TE’s business. Apart from this business
relationship, in the initial years, the transnational firm did not have any other
significant customers. After three years, in around 2008, the transnational firm
made another significant step forward by winning a contract with a transnational
institution in Brussels from this business relationship. This time, the TE developed
several larger software application that help the transnational organization to
streamline internal data processing.
Similar to the first customer, the founder of the transnational firm relied on his
personal networking abilities to acquire this new account which has since
developed into a new business relationship of considerable importance.
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Subsequently, the founder started to concentrate on finding new clients to extend
and solidify the base of the business. In the first years, acquisition of new clients
was concentrated on the French and Belgian market, in particular profiting from
the connections the TE already had obtained from his first two important
costumers. Subsequently, he extended his business and acquired new clients in
neighbouring markets like Spain, later Germany, the UK and the Czech Republic.
An important milestone was reached for the company when they could enter into
contract relationships with a large German utility. Since 2011 six years after
inception in 2011, the transnational firm also began to develop its home market in
a more significant manner. During the initial years the turnover generated in the
Romanian market was insignificant, but by 2010 about 10% of the firm’s turnover
was generated in the domestic Romanian market. What is also worth to mention is
the fact the TE has now set up a technical school for software developers in his
native home town, obviously a step towards dealing with the threat of increasing
scarcity of qualified programmers in the labour market including Romania.
4. Discussion
I found that through a specific combination of resources the entrepreneur was
able to profit from specialized local technological knowledge in his home country
and then leveraged this resource in the host country. While he founded a firm in the
home country, the entrepreneur kept residency in the host country to develop new
customer relationships. Subsequently the entrepreneur internationalized his firm
and expanded into new business activities. Taking this case as an example, I
showed how TEs can create and leverage resources to create sustainable
competitive advantage. This case highlights a number of issues which have until
now been mainly ignored in the literature. Firstly, it seems that little is still known
about the on-going internationalization of TEs. In the literature, the focus has so far
mainly been on the home/ host country conditions a TE is exposed to, but what is
happening in terms of subsequent on-going internationalization of the TE’s
venture? I find that in our case the TE is following the patters of
internationalization as conceptualized by the Uppsala model.17 But I also observed
some deviations from this pattern of gradual internationalization as described in the
Uppsala school. In line with this approach, it seems that the point of departure of
the internationalization process is the host country of residence of the TE. From
there, the venture is expanding into markets which are psychologically close to the
TE (Spain, Belgium) and then to psychologically somewhat more distant markets
like the Czech Republic or Germany. However, the peculiarity in this case resides
in the fact that expansion into the TE’s Romanian home market is taking place at a
later point in time and only after progression into other foreign markets had already
taken place. This is not in line with the predictions made by the Uppsala school
since the TE should be in close psychological distance to his home country.
Therefore, with regards to internationalization patterns of TE operated ventures we
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Arnim Decker
Transnational Entrepreneurship and Opportunity Recognition
__________________________________________________________________
argue for the existence of a knowledge gap which merits further investigation for a
better understanding of TE’s behavioural patterns.
Linked to this point are the psychological patterns of recognition of
entrepreneurial opportunities. I drew on the social capital perspective to understand
how in this case the TE identifies opportunities and how this translates into the ongoing development of the TE’s venture. The psychological pattern recognition of
the TE was determined by host country conditions, not the home country from
where the TE run his venture. Opportunities were identified from the perspective
of the TE’s country of residence, not from the home market were his venture was
located. Consequently, internationalization departed from host country. The TE
derived competitive advantage from the fact that he was able to leverage diverse
networks between the home and the host country. From a technological perspective
I observed that the venture followed the general technological trends for software
development of that time. This case depicts a form of internationalization which
differs from those typically discussed in the literature about international new
ventures. For future investigations, I argue that study of international new ventures
can profit from a better understanding of diversity found in transnational
entrepreneurship.
Notes
1
Johan Johanson and Jan-Erik Vahlne, ‘The Internationalization Process of the
Firm: A Model of Knowledge Development and Increasing Foreign Market
Commitments’, Journal of International Business Studies 8.1 (1977): 23–32.
2
Marian V. Jones, Nicole Coviello, and Yee Kwan Tang, ‘International
Entrepreneurship Research (1989–2009): A Domain Ontology and Thematic
Analysis’, Journal of Business Venturing 26.6 (2011): 632–659.
3
Benjamin Oviatt and Patricia Phillips McDougall, ‘Toward a Theory of
International New Ventures’, Journal of International Business Studies 25.1
(1994): 45–64.
4
Ibid., 51
5
Erkko Autio, Harry J. Sapienza and James G. Almeida, ‘Effects of Age at Entry,
Knowledge Intensity, and Imitability on International Growth’, Academy of
Management Journal 43.5 (2000): 909–924.
6
Srilata Zaheer, ‘Overcoming the Liability of Foreignness’, Academy of
Management Journal 38.2 (1995): 341–363.
7
AnnaLee Saxenian, Yasuyuki Motoyama, and Xiaohong X. Quan, ‘Local and
Global Networks of Immigrant Professionals in Silicon Valley’, Public Policy
Institute of California. (2002)
8
Jaqueline Nahapiet and Sumantra Ghoshal, ‘Social Capital, Intellectual Capital,
and the Organizational Advantage’, Academy of Management Review 23.2 (1998):
242-266.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
54
55
__________________________________________________________________
9
Sanya Ojo, ‘Diaspora Entrepreneurship: New Directions in Enterprise
Development’, Enterprise Development in SMEs and Entrepreneurial Firms:
Dynamic Processes, ed. Nelson Oly Ndubisi und Sonny Nwankwo, Hershey:
Business Science Reference, 2013.
10
Donna Marie De Carolis and Patrick Saparito, ‘Social Capital, Cognition, and
Entrepreneurial Opportunities: A Theoretical Framework’, Entrepreneurship
Theory and Practice 30.1 (2006): 41–56.
11
Ronald S. Burt, ‘The Social Capital of Structural Holes’, The New Economic
Sociology: Developments in An Emerging Field (2002): 148–190.
12
Ronald S. Burt, ‘Structural Holes and Good Ideas’, American Journal of
Sociology 110.2 (2004): 349–399.
13
Wei-ping Wu, ‘Dimensions of Social Capital and Firm Competitiveness
Improvement: The Mediating Role of Information Sharing’, Journal of
Management Studies 45.1 (2008): 122–146.
14
De Carolis, ‘Social Capital’, 41–56.
15
Burt, ‘The Social Capital of Structural Holes’, 148–190
16
Ronald. S. Burt, ‘Attachment, Decay and Social Network’. Journal of
Organizational Behaviour 22.6 (2001): 619–643
17
Johan Johanson and Jan-Erik Vahlne, ‘The Uppsala Internationalization Process
Model Revisited: From Liability of Foreignness to Liability of Outsidership’,
Journal of International Business Studies 40.9 (2009): 1411–1431.
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© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Arnim Decker
Transnational Entrepreneurship and Opportunity Recognition
__________________________________________________________________
———. ‘The Network Structure of Social Capital’. Research in Organizational
Behavior 22 (2000): 345–423.
———. ‘The Social Capital of Structural Holes’. The New Economic Sociology:
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(2004): 349–399.
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View of the Firm’. International Studies of Management and Organization 39.2
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Entrepreneurial Opportunities: A Theoretical Framework’. Entrepreneurship
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Small and Medium-sized Firms’. Small Business Economics 24.4 (2005): 409–419.
Johanson, Johan and Jan-Erik Vahlne. ‘The Internationalization Process of the
Firm: A Model of Knowledge Development and Increasing Foreign Market
Commitments’. Journal of International Business Studies 8.1 (1977): 23–32.
———. ‘The Uppsala Internationalization Process Model Revisited: From
Liability of Foreignness to Liability of Outsidership’. Journal of International
Business Studies 40.9 (2009): 1411–1431.
Jones, Marian V., Nicole Coviello, and Yee Kwan Tang. ‘International
Entrepreneurship Research (1989-2009): A Domain Ontology and Thematic
Analysis’. Journal of Business Venturing 26.6 (2011): 632–659.
Nahapiet, Jaqueline and Sumantra Ghoshal. ‘Social Capital, Intellectual Capital,
and the Organizational Advantage’. Academy of Management Review 23.2 (1998):
242–266.
Ojo, Sanya. ‘Diaspora Entrepreneurship: New Directions in Enterprise
Development’. Enterprise Development in SMEs and Entrepreneurial Firms:
Dynamic Processes, edited by Nelson Oly Ndubisi und Sonny Nwankwo, 42–63.
Hershey: IGI Global, 2013.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
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57
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Oviatt, Benjamin and Patricia Phillips McDougall. ‘Toward a Theory of
International New Ventures’. Journal of International Business Studies 25.1
(1994): 45–64.
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Saxenian, AnnaLee, Yasuyuki Motoyama, and Xiaohong X. Quan. ‘Local and
Global Networks of Immigrant Professionals in Silicon Valley’ Public Policy
Institute of California, 2002.
Wu, Wei-ping. ‘Dimensions of Social Capital and Firm Competitiveness
Improvement: The Mediating Role of Information Sharing’. Journal of
Management Studies 45.1 (2008): 122–146.
Zaheer, Srilata, ‘Overcoming the Liability of Foreignness’. Academy of
Management Journal 38.2 (1995): 341–363.
Arnim Decker currently holds a position as an assistant professor at Aalborg
University in Denmark. He has completed his studies in business administration at
University of Cologne/ Germany, and obtained a doctorate degree in finance from
Complutense University of Madrid/ Spain. His research interests include the areas
of international entrepreneurship as well as transnational entrepreneurship.
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Arnim Decker
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Aki Harima
Abstract
Diaspora and migration entrepreneurship has been investigated by various
researchers in the last few decades. Since the rapidly increasing number of
migrants and diasporans worldwide engage in transnational entrepreneurial
activities, their unique economic activities have considerable impact on the modern
world. Diaspora entrepreneurship is a complex and diversified phenomenon by
nature. Diasporans refers to migrants and their descendants who have a strong
emotional connection to their country of origin (COO). 1 This term, however,
comprises people with different motivation, situations and resources. Previous
studies have not fully tackled this inherit heterogeneity. Due to lack of exhaustive
classifications to reduce the heterogeneity of this phenomenon, findings of studies
on diaspora businesses and entrepreneurship in the past are fragmented, which
hinders development of common understandings on this topic. Considering
weaknesses and strengths of existing classification of diaspora entrepreneurship, I
suggest an alternative classification based on different migration directions by
focusing countries’ economic situations and discuss characteristics of each type of
diaspora entrepreneurship. This classification focuses on the environmental
influence on diasporans’ motivation, individual resource as well as collective
resources.
Key Words: Diaspora entrepreneurship, motivation, diaspora resources.
*****
1. Introduction
Entrepreneurial activities of diasporans are inseparable from the modern world
economy. Diasporans are defined as migrants and their descendants who still have
strong home country orientation.2 They are characterized by dispersion, homeland
orientation and boundary-maintenance. 3 Their entrepreneurial activities have
attracted considerable interest of researchers and policy makers due to the scale of
their impact as well as their unique nature. For instance, diasporas are believed to
be a source of international money flows in the form of remittance, 4 which
financially supports the national economy of many countries. 5 The flows which
diasporas create is not only the remittance flow. They also transfer knowledge,
culture and technology from a country to another. This phenomenon is called
‘Brain Circulation’. 6 Diaspora entrepreneurship is unique by nature, since
diasporans are embedded in two or more than two different cultural and societal
contexts. This so-called ‘mixed embeddedness’ characterizes their entrepreneurial
activities in various manners. For instance, they may identify idiosyncratic
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Classification of Diaspora Entrepreneurship
Classification of Diaspora Entrepreneurship
__________________________________________________________________
business opportunities which have been overlooked by the local population. They
also may leverage diverse networks in different countries.
A number of researchers have been committed to the exploration of the impact
as well as the nature of their entrepreneurial activities. Among other topics, many
researchers have investigated the impact of diaspora business mainly on their
COO, 7 which is defined as the country the person or his or her ancestors are
originated from and identify as home country.
Despite of a number of research attempts, previous findings and results are
fragmented as the lack of consideration for the heterogeneity of diaspora
entrepreneurship and therefore do not offer a big picture of the entire phenomenon.
Many studies focus on one specific diaspora group such as India and China.8 .
In other words, an insufficient effort has been devoted to clarify the inherit
heterogeneity of this phenomenon. In fact, studies in the past have predominantly
investigated diaspora entrepreneurs who migrate from economically less developed
countries to more developed countries. 9 There are, however, diasporans who
migrate to different directions.10 Needless to say, the former type of diasporans is
different in various aspects from the latter one. For instance, African migrants in
Europe would have a different starting point from European migrants in Africa,
because their COOs have different history and current conditions. Such historical
capitals influence the nature and characteristics of each diaspora group. In order to
tackle this heterogeneity, there is a necessity to develop a classification for
diaspora entrepreneurs. There are a few previous researchers have attempted to
classify diaspora entrepreneurs. For instance, Riddle and Brinkerhoff highlighted
the presence of returnee entrepreneurs as one of the forms of diaspora
entrepreneurship. 11 Moreover, Elo developed a model classifying diaspora
entrepreneurs into 9 groups according to the economic situation of their COR as
well as COO. While this model enables a more systematic understanding of the
phenomenon, there is still scope for improvement for mainly three reasons: First,
this model is not exhaustive. For instance, returnee entrepreneurs are not
considered. Second, characteristics of 9 groups are not fully discussed. Third, it is
questionable whether it is meaningful to make a detailed classification. This model
distinguishes between those who migrate from developing countries to developed
countries and those who from emerging countries to developed countries. In order
to enable an accumulation of previous findings in this research area, I suggest that
it is necessary to develop a simple classification model which highlights
commonalities and similarities of various diaspora populations.
Considering the above mentioned concerns, this chapter suggests an alternative
classification by demonstrating four types of diaspora entrepreneurship: (i)
Ascending Diaspora Entrepreneurship; (ii) Descending Diaspora Entrepreneurship,
(iii) Horizontal Diaspora Entrepreneurship, and (iv) Returnee Entrepreneurship.
This chapter is structured as follows: First, it is argued which aspects may
differ between different diaspora groups. Subsequently, a classification with four
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generic types of diaspora entrepreneurship is presented. Finally, potential
weaknesses as well as strengths of this classification will be discussed.
2. Heterogeneity of Diaspora Entrepreneurship
Diaspora entrepreneurs shares common characteristics mainly due to so-called
mixed embeddedness.12 Diasporans are socially and culturally embedded in more
than two different national contexts. They are familiar with cultures and norms of
both COO and COR.13 This mixed embeddedness is a source of different resources
for diaspora business, since it enables entrepreneurs to combine COO’s resources
and COR’s resources. 14
Network resources have been argued as a type of resource which characterizes
diaspora entrepreneurship. Diasporans may utilize multiple network for their
business. In the entrepreneurship research, network has been recognized as an
essential resource for entrepreneurs.15 Diaspora has a potential access to different
types of network. First, they have networks with the local population in COR.
Second, they have networks with their co-ethnics in COO. Third, they have
networks with their co-ethnics outside of COO (mostly COR). The third type of
network has attracted substantial research attention as ‘Diaspora Network’. 16
Diaspora networks are believed to function as a platform for knowledge transfer,
international trade and suppliers and customers.17
Although diaspora entrepreneurs share certain commonalities, they can differ
from each other to a large extent depending on the socio-economic situations of
their home and host countries.
First, I look at their motivation for becoming an entrepreneur. Here one should
be aware that there are two different phases of motivation related to diaspora
entrepreneurship. The first type is motivation for migration. Why do they leave
their COO to migrate into COR? There are usually two different but overlapped
decisions are involved, leaving their COO and selecting a specific COR. While
economic and political situations often play a crucial role in the first decision, other
reasons can also be observed such as marriage migrants and expatriates.18 Migrants
choose specific CORs for various reasons. Some select a destination which offer
more comfortable institutional conditions, while others select the ones by
following their family, friends as well as acquaintances or by counting on supports
of diaspora networks. These decisions are made by the first generation of migrants.
The second type of motivation is for becoming an entrepreneur in CORs. Why
do they choose an entrepreneurial career instead of other vocational options?
Entrepreneurial motivation is an outcome of complex mechanism with various
push and pull factors.19 While a lack of vocational opportunities as well as a glass
ceiling effect in career in COR may push diasporans to become entrepreneurs,
unique business opportunities or strong willingness for achievement are regarded
as pull factors.
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Aki Harima
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Second, depending on institutional conditions of COOs, diasporans’ individual
resources vary to a large extent. For instance, obligations to send remittance to
CORs may be less relevant, when the COO’s economy is doing well. Individual
resources can be in a non-monetary form. When COO’s institutional systems are
well developed, migrants who are originate from the country are more likely to
have advanced educational backgrounds as well as qualifications. The availability
of such resources expands entrepreneurs’ opportunities in CORs, as it positively
influences entrepreneurial opportunity recognition.20
Third, not only individual resources, but also collective resources may
influence their entrepreneurial opportunities. Similar to the well-known country-oforigin effect on consumer perception, the COO’s image can both positively and
negatively influence services and products offered by diasporans’s business. 21E
Furthermore, the availability, size and nature of diaspora networks differ,
depending on the type of diaspora entrepreneurship.
4. Four Types Classifying Diaspora Entrepreneurship
Considering the common and differentiating aspects discussed above, I suggest
a modification of the classification of diaspora entrepreneurship developed by Elo
(2013) according to the national socio-economic situations of COO and COR by
demonstrating four generic types. When we focus on the degree of economic
development of these countries, following four different directions of migration
can be considered:
1. Migration from economically less developed countries to
more developed countries;
2. Migration from economically more developed countries to
less developed countries;
3. Migration between countries with similar economic
standards;
4. Return migration from economically more developed
countries to less developed countries.
Based on these four directions, diaspora entrepreneurship is classified into four
main types: (i) Ascending Diaspora Entrepreneurship, (ii) Descending Diaspora
Entrepreneurship, (iii) Horizontal Diaspora Entrepreneurship, and (iv) Returnee
Entrepreneurship. Characteristics of each type are presented in line with the key
differentiating aspects discussed above. 22
‘Ascending Diaspora Entrepreneurship’ is defined as entrepreneurship of
diasporans who migrate from economically less developed countries to more
developed countries. For instance, diaspora entrepreneurs who originate from
developing countries to emerging countries or from emerging countries to
developed countries are classified into this type. Their main motivation to emigrate
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COOs are to improve their life conditions caused by, for instance, weak home
economy and following unemployment, and political instabilities. These people are
likely to choose an entrepreneurial career in CORs due to various restrictions.23 For
instance, the lack of language proficiency or qualifications may lead restrictions in
the host job market such as earning lower wages than the local population. 24
Ascending diaspora entrepreneurs are less likely to have individual resources, as
institutional conditions in their COOs are underdeveloped. While some of them
surely have commercializable ethnic resources, their ethnic resources are less
likely to be associated with premium image. This type of diaspora entrepreneurs
has mostly been investigated by previous researchers.
‘Descending Diaspora Entrepreneurship’ refers to entrepreneurial activities of
diasporans who migrate from a country with a higher economic standard to a
country with a lower economic standard. 25 This group migrates to an opposite
direction of the first type. Their motivation for migration is assumed to be highly
diversified, as the economic and political conditions as well as institutions in their
COOs are well developed and stable. They are more likely to be driven by personal
interests such as international marriage or opportunities arising from economic
gaps between two countries. 26 Opposite to the first type, they are more likely to
have advanced educational backgrounds as well as qualifications. They also may
benefit from the premium image of their COOs. For instance, German diasporans
can easily charge higher price on their service or products in CORs by labelling
them ‘German high-standard’. This type of diaspora entrepreneurship has not been
explicitly investigated in the previous research.
‘Horizontal Diaspora Entrepreneurship’ refer to entrepreneurial activities by
diasporans who migrate between countries with similar economic standards. This
type of entrepreneurship was described as ‘medium asymmetry diaspora
entrepreneurship’ or ‘low asymmetry diaspora entrepreneurship’ in the Elo’s
model. 27 This type can be sub-classified by the degree of national economic
development of their COOs. The first sub-category comprises diasporans
originated from a well-developed country who migrate into another developed
country to engage in entrepreneurial activities. French entrepreneur in United
Kingdom or American entrepreneur in Germany are categorized into this group.
The challenges they face in CORs or barriers for migration may be less significant,
as both COOs and CORs share similar advanced economic and institutional
environments. Those who leave such a developed country often belong to the
higher societal class and possess a higher academic degree or qualifications. The
second type of horizontal diaspora entrepreneurship takes place between less
developed countries. Ethiopian entrepreneur in Kenya or Chinese entrepreneur in
India are classified into this group. Although the degree of economic development
of COOs and CORs are similar in their case, culture and institutions of these
countries differ to a large extent. Therefore, they are assumed to face more
challenges than the former type. Unlike ascending diaspora entrepreneurs, they do
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Aki Harima
Classification of Diaspora Entrepreneurship
__________________________________________________________________
not leverage a significant economic gap across national borders. Perhaps, they have
to make a suboptimal decision to do their business in neighbour countries instead
of developed ones for some reasons, for instance, lack of financial capitals to
migrate to developed countries. They may have even less individual resources.
Horizontal diaspora entrepreneurship is also almost invisible in the previous
literature on diaspora and migration entrepreneurship.
'Returnee Entrepreneurship’ is a specific form of diaspora entrepreneurship, as
it takes place in COOs unlike the other three types.28 It refers to entrepreneurial
activities of so-called ‘returnees’, diasporans who come back to their COOs after
spending many years in CORs. 29 It is often diasporans who originate from
developing or emerging countries and spent many years in developed countries.
Such people have experience and knowledge from CORs to transfer back to
COOs. 30 They are often motivated by altruism and philanthropy for homeland
investment.31 Similar to descending diaspora entrepreneurs, they have a great deal
of individual resources they gained in CORs.
The classification presented in this section is illustrated in the Figure 1.
Figure 1: Classification of Diaspora Entrepreneurship.
© 2015 Aki Harima. Courtesy of the author
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5. Discussions
Due to the heterogeneity of this phenomenon, this classification has several
potential problems. First, as this classification focuses on the economic situation on
country level, diversities within countries are not considered. For instance, there
are substantial gaps between social classes within a same country. Despite of weak
economic and institutional conditions of developing countries, people in the upper
social class may be well-educated, rich and qualified. In a similar vein, developed
countries have the poor as well. One should be aware that the classification
presented above cannot consider such extremes of the population.
Second, there is also a vast difference between countries with similar economic
situations. They may differ in other environmental and institutional factors than
economic factors including political situations, the size of the country,
geographical resources and culture and norms. For instance, diasporans from large
countries like China and India have recognizable and perhaps more
commercializable ethnic resources than the ones from smaller countries like
Timor-Leste or Benin. The former diasporans may have stronger diaspora
networks worldwide than the latter ones. Further considerations on to which extent
one can apply the discussion above to countries in different conditions are required.
Third, the time dimension is missing in this classification. The diaspora
phenomenon influence not only the first generation but also subsequent
generations. As the speed of economic development varies between countries, the
economic gap between COOs and CORs does not remain same over time. Japanese
diaspora in Latin America is a good example. Japanese economy was worse than
Latin Americans when Japanese migrated to Latin American countries like Brazil,
Argentina, and Peru in the beginning of the 20th Century. At the present day,
however, Japanese economy is much more advance than these countries. In other
words, the first generation of Japanese diasporans in Latin America was ascending
diaspora entrepreneurs, while the second and third generation or those who
recently migrated to Latin America may be regarded as descending diaspora
entrepreneurs.
One should be aware of these potential drawbacks of this classification when
applying it to the research.
6. Conclusion
This chapter presents an alternative way of classifying diaspora
entrepreneurship according to the degree of national economic development in
COOs and CORs as well as four generic types of diaspora entrepreneurs by
modifying the model developed by previous researchers. 32 As discussed in the
previous section, this classification has several potential problems caused by the
heterogeneity of this phenomenon. I suggest, however, when considering these
potential weaknesses of this classification and applying it in a proper manner, it
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Aki Harima
Classification of Diaspora Entrepreneurship
__________________________________________________________________
offers several significant benefits which contribute to the current research on
diaspora entrepreneurship.
First, this classification clearly illuminates that previous research on diaspora
entrepreneurship is partial, as it overemphasizes specific types of diaspora
entrepreneurship. Through the classification, it becomes clear that ascending
diaspora entrepreneurship as well as returnee entrepreneurship have been a central
research objective and descending diaspora entrepreneurship as well as horizontal
diaspora entrepreneurship are rather invisible in the literature. This research
overview reinforces the need to research the latter types of diaspora
entrepreneurship in future.
Second, this classification is helpful to create a big picture of this phenomenon,
as it enables researchers to sort out previous findings according to different types
of diaspora entrepreneurship. By combining and reconstructing the models
developed by previous studies, this model offers an exhaustive and simplified view
of diaspora entrepreneurship. It enables an application of research findings of one
diaspora group to other ones, which helps researchers to build collective
knowledge as well as understanding about this phenomenon.
This attempt to develop a comprehensive classification of diaspora
entrepreneurship is still in its infancy. Therefore, more efforts should be made to
develop this classification further to cover the heterogeneity of this phenomenon.
However, applying this classification to the current and future research will open
new chances and opportunities in investigating the phenomenon of diaspora
entrepreneurship.
Notes
1
William Safran, ‘Diasporas in Modern Societies: Myths of Homeland and
Returne’, A Journal of Transnational Studies 1.1 (1991): 83-99.
2
William Safran, ‘Diasporas in Modern Societies: Myths of Homeland and
Returne’, A Journal of Transnational Studies 1.1 (1991): 83-99.
3
Rogers Brubaker, ‘The “Diaspora” Diaspora’, Ethnic and Racial Studies 28.1
(2005): 1-19.
4
J. Edward Taylor, ‘The New Economics of Labour Migration and the Role of
Remittances in the Migration Process’, International Migration 37.1 (1999): 63-88.
; OECD, ‘International Migration Outlook’, OECD Publishing Paris. 16 January
2016, DOI: http://dx.doi.org/10.1787/migr_outlook-2014-en
5
Jules M. Rubyutsa, ‘The Role of Remittance in Development: The Case of
Rwandan Diaspora’ Remittances’, Rwanda Journal 26.B (2012):120-132.; Manuel
Orozco, ‘Globalization and Migration. The Impact of Family Remittances in Latin
America’, Latin American Politics and Society 44.2 (2002): 41-66.
6
Damtew Teferra, ‘Brain Circulation: Unparalleled Opportunities, Underlying
Challenges, and Outmoded Presumptions, Journal of Studies in International
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
66
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Education 9.3 (2005): 229-250; Rosalie L. Tung, ‘Brain Circulation, Diaspora, and
International Competitiveness’, European Management Journal 26.5 (2008): 298304; AnnaLee Saxenian, ‘From Brain Drain to Brain Circulation: Transnational
Communities and Regional Upgrading in India and China’, Studies in Comparative
International Development 40.2 (2005): 33-61.
7
Country of Origin.
8
Wenhong Chen and Justin Tan, ‘Understanding Transnational Entrepreneurship
through a Network Lens: Theoretical and Methodological Considerations’,
Entrepreneurship Theory and Practice 33.5 (2009): 1079-1091.
9
Kathleen Newland and Hiroyuki Tanaka, ‘Mobilizing Diaspora Entrepreneurship
for Development’; Migration Policy Institute (Washington DC, 2010); Sanya Ojo,
‘Ethnic Enclaves to Diaspora Entrepreneurs: A Critical Appraisal of Black British
Africans’ Transnational entrepreneurship in London’, Journal of African Business
13.2 (2012): 145-156.
10
Maria Elo, ‘Diaspora Entrepreneurs in and from an Emerging Market: Narratives
from Uzbekistan’, 12th Vaasa Conference on International Business (Vaasa,
Finland, 21-23. August 2013).
11
Liesl Riddle and Jennifer Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’, International Business Review 20
(2011): 670-680.
12
Robert Kloostermann, ‘Mixed Embeddedness: (In)Formal Economic Activities
and Immigrant Businesses in the Netherlands’, International Journal of Urban and
Regional Research 23.2 (1999): 253-267.
13
Country of residence, the place the person currently resides, which is different
from COO.
14
Kloostermann, ‘Mixed Embeddedness’.
15
Susanna Slotte-Kock and Nicole Coviello, ‘Entrepreneurship Research on
Network Process: A Review and Ways Forward’, Entrepreneurship Theory and
Practice 34.1 (2010): 31-57; Aodheen O’Donnel, et al., ‘The Network Construct in
Entrepreneurship Research: A Review and Critique’, Management Decision 39.9
(2001): 749-760.
16
Yevgeny Kuznetsov, Diaspora Networks and the International Migration of
Skills: How Countries Can Draw on Their Talent Abroad (Washington DC: World
Bank Publications, 2006)
17
Suren G. Dutia, ‘Diaspora Networks: A New Impetus to Drive
Entrepreneurship’, Innovation Technology Governance Globalization 7.1 (2012).
65-72; Rauch, James E and Trindade, Vitor, ‘Ethnic Chinese Networks in
International Trade’, Review of Economics and Statistics 84.1 (2002): 116-130;
Janet W. Salaff, et al., ‘Ethnic Entrepreneurship, Social Networks, and the
Enclave’, Approaching Transnationalism: Transnational Societies, Multicultural
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Aki Harima
Classification of Diaspora Entrepreneurship
__________________________________________________________________
Contacts, and Imagining of Home. Ed. Brenda Yeoh, Tong Chee Kiong, and
Michael Walter Charney (Kluwer Academic Publishers, Boston, 2003): 61-82.
18
Johanna Leinonen, ‘Money Is Not Everything and that’s the Bottom Line:
Family Ties in Transatlantic Elite Migrations’, Social Science History 36.2 (2012):
243-268; Brenda SA Yeoh, and Louisa-May Khoo, ‘Home, Work and Community:
Skilled International Migration and Expatriate Women in Singapore’, International
Migration 36.2 (1998): 159-186.
19
Jodyanne Kirkwood, ‘Motivational Factors in a Push-Pull Theory of
Entrepreneruship’, Gender in Management: An International Journal 24.5 (2009):
346-364.
20
Alexander Ardichvili et al., ‘A Theory of Entrepreneurial Opportunity
Identification and Development’, Journal of Business Venturing 18 (2003): 105123.
21
Warren Bilkey and Erik Nes, ‘Country-of-origin effects on product evaluations’,
Journal of International Business Studies 13.1 (1982): 89-100; Michael Chattalas
et al., ‘The Impact of National Stereotypes on the Country of Origin Effect: A
Conceptual Framework.’, International Marketing Review 25.1 (2008): 54-74.
22
Aki Harima, ‘Network Dynamics of Descending Diaspora Entrepreneurship:
Multiple Case Studies with Japanese Entrepreneurs in Emerging Economies’,
Journal of Entrepreneurship, Management and Innovation 10.3: 65-92.
23
Olawale Fatoki and Tilton Patswawairi, ‘The Motivations and Obstacles to
Immigrant Entrepreneurship in South Africa’, Journal of Social Sciences 32.2:
133-142.
24
Amelie F. Constant, et al., ‘What Makes an Entrepreneur and Does It Pay?
Native Men, Turks and Other Migrants in Germany’, IZA Discussion Paper Series
940 (2003).
25
Aki Harima, ‘Network Dynamics of Descending Diaspora Entrepreneurship’..
26
Leinonen, ‘Money is Not Everything and that’s the Bottom Line’, 243.
27
Elo, ‘Diaspora Entrepreneurs in and from an Emerging Market’.
28
Riddle and Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional Change
Agents’.
29
Xiahui Liu, et al., ‘Returnee Entrepreneurs, Knowledge Spillovers and
Innovation in High-Tech Firms in Emerging Countries’, Journal of International
Business Studies 41.7 (2009): 1183-1197.
30
Igor Filatotchev, et al., ‘The Export Orientation and Export Performance of
High-Technology SMEs in Emerging Markets: The Effects of Knowledge Transfer
by Returnee Entrepreneurs’, Journal of International Business Studies 40.6 (2009):
1005-1021.
31
Kate Gillespie, et al., ‘Diaspora Interest in Homeland Investment’, Journal of
International Business Studies 30.3 (1999): 623-634.
32
Elo, ’Diaspora Entrepreneurship in and from an Emerging Market‘.
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68
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Classification of Diaspora Entrepreneurship
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Safran, William, ‘Diasporas in Modern Societies: Myths of Homeland and
Returne’, A Journal of Transnational Studies 1.1 (1991): 83-99.
Salaff, Janet W., Greve, Arent, Wong, Siu-Lun, and Li Ping, Lynn Xu, ‘Ethnic
Entrepreneurship, Social Networks, and the Enclave’. Approaching
Transnationalism: Transnational Societies, Multicultural Contacts, and Imagining
of Home. Ed. Brenda Yeoh, Tong Chee Kiong, and Michael Walter Charney
(Kluwer Academic Publishers, Boston, 2003): 61-82.
Saxenian, AnnaLee, ‘From Brain Drain to Brain Circulation: Transnational
Communities and Regional Upgrading in India and China’, Studies in Comparative
International Development 40.2 (2005): 33-61.
Slotte-Kock, Susanna and Coviello, Nicole, ‘Entrepreneurship Research on
Network Process: A Review and Ways Forward’, Entrepreneurship Theory and
Practice 34.1 (2010): 31-57.
Taylor, J. Edward, ‘The New Economics of Labour Migration and the Role of
Remittances in the Migration Process’, International Migration 37.1 (1999): 63-88.
Teferra, Damtew, ‘Brain Circulation: Unparalleled Opportunities, Underlying
Challenges, and Outmoded Presumptions’. Journal of Studies in International
Education 9.3 (2005): 229-250.
Tung, Rosalie L, ‘Brain Circulation, Diaspora, and International Competitiveness’.
European Management Journal 26.5 (2008): 298-304.
Vemuri, Siva R., ‘Formation of Diaspora Entrepreneurs,’ ZenTra Working Paper
in Transnational Studies No. 41/2014 (2014). Viewed on 18 August 2015,
http://ssrn.com/abstract=2519432 or http://dx.doi.org/10.2139/ssrn.2519432
Yeoh, Brenda SA. and Khoo, Louisa-May, ‘Home, Work and Community: Skilled
International Migration and Expatriate Women in Singapore’. International
Migration 36.2 (1998): 159-186.
Aki Harima is a research assistant and PhD candidate at the Chair in Small
Business & Entrepreneurship (LEMEX) of the University of Bremen, Germany.
Her research focus lies on transnational entrepreneurial activities of individuals and
SMEs (Small and medium-sized enterprises). She has been investigating
entrepreneurial activities of the Japanese diaspora in emerging and developing
economies.
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Aki Harima
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Mohammad B. Rana and Maria Elo
Abstract
The Multinational enterprises (MNE) are viewed as proactive global economic
actors that enter new and emerging markets with an intentional strategy building on
their inherent resources and firm-specific advantages. However, there are
numerous actors involved at market entry-level who may constitute thresholds for
the entry. Emerging markets tend to possess complex institutional contexts and
thus may incorporate idiographic entry challenges. Our study presents two underexamined types of stakeholders as distinct actors related to emerging market entry
process: diaspora and civil society. How did these actors influence the creation of
international new venture (INV) – Grameenphone– in Bangladesh and the
respective internationalization process? This embedded case study analyses and
describes the stages of development, how Norwegian Telenor, American
Gonophone, Japanese Marubini and Bangladeshi Grameen Bank created an INV
named Grameenphone in Bangladesh, and how diaspora and civil society actors
formed the primus motor and organizational capability base for this establishment
and internationalization process, – which would not have happened without their
market driving and enabling influence. The findings illustrate the central role of
diaspora related innovation, motivation, knowledge, network and funding that
supported this emerging market INV development. The study contributes to
internationalization theory, transnational diaspora entrepreneurship and civil
society research discovering their impact as necessary organizational capability for
market entry.
Key Words: Diaspora, civil society actor, multinational enterprise,
internationalization
process,
transnational
diaspora
entrepreneurship,
organizational capability, Bangladesh.
*****
1. Introduction
MNEs tend to portray a rational1 and intended strategic behaviour in case of
internationalisation. International business (IB) literatures argue that MNEs
internationalisation is influenced by their strategic intent,2 ownership advantages,3
learning effect4 and the institutional opportunities5 in host and home contexts,
postulating that MNEs are proactive global economic actors.
Our chapter, instead, argues that diaspora member in collaboration with civil
society (CS) actor influence MNE internationalisation in emerging market. We
demonstrate that MNEs are not the market driver alone, emerging market diaspora
also tend to appear as entrepreneurs, mediator, and catalyst, and act as a market
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Diaspora, Civil Society Actors and Emerging Market Entry
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
driver in IB. As diasporas tend to connect to homeland civil society and institutions
through social and cognitive network, they can capitalize on the local resources
jointly with CS and institutional actors and create an interesting synergy. Diaspora
members, i.e. diasporans, are often driven by homeland orientation and different
motivations than those of the economic actors, and thus they are able to connect to
both home- and host land business networks.6 They possess the contextual
intelligence,7 entrepreneurial capability, global network, and often creative
thinking, which allow diaspora members to access to scarce local resources. This
capability of diaspora therefore complements MNE liability of newness and
foreignness, and supplement MNEs organisational and managerial capability to
internationalise and sustain in a foreign market context. The effect of diaspora on
IB has been acknowledged,8 but sufficient attention has not been paid to
investigate the mechanism and the degree to which diaspora play role in MNEs
internationalisation. Studies reveal that diaspora affects cross-border investment,9
plays catalytic role in creating home grown MNEs in China,10 provides knowledge
and capital resources to Indian software firms to internationalise to USA,11 and acts
as change agent in institutions.12 However, studies neglected how diaspora can
influence and guide MNEs to internationalise to an emerging market in which
diaspora plays lead role to create an international new venture (INV) in
collaboration with CS actor.
In this chapter we answer the question how did diaspora and civil society actors
influence the creation of an INV (i.e. Grameenphone) and affect the respective
internationalisation of an MNE in Bangladesh? Both Diaspora and CS actors
complemented the organisational capability of MNE that eventually affected
MNEs internationalisation and INV creation.
Our chapter presents a new perspective in which MNE internationalisation has
been illustrated as a reactive phenomenon while diaspora played the proactive role
in the internationalisation process. MNE’s learning, which is complemented by
diaspora and CS actor’s collaboration at the development stage, literary began to
effect after internationalisation to Bangladesh. Emergent actors (i.e. diaspora & CS
actors) affecting internationalisation of MNEs in emerging markets add-on a new
perspective in IB literature. This is the first empirical and descriptive study that
examines the role of diaspora together with CS actors in the internationalization of
MNEs in emerging markets.
Using a single embedded case study - Grameenphone Limited, Bangladesh - we
bring a new perspective, develop propositions, and illustrate previously neglected
mechanisms of MNE internationalisation in emerging market. Our chapter
contributes to the internationalisation and international entrepreneurship literature,
and illustrates the impact of transnational diaspora and civil society on MNEs
organizational capability, leading to internationalisation in emerging markets. The
case is theoretically relevant and interesting as Grameenphone (GP) is an
international-new-venture (INV) in Bangladesh while its ownership, initially,
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comprised Telenor from Norway, Grameen Telecom - a sister concern of
Grameeen Bank (NGO) from Bangladesh, Gonophone from USA- founded by a
Bangladeshi diaspora in USA- Mr. Iqbal Quadir, and Marubini- a trading company
from Japan. The idea and initiative of setting this INV in Bangladesh was made by
Iqbal Quadir. Today, Grameenphone is the largest telecommunication service
provider in Bangladesh with over 50 million consumers.13
2. Overview of the Literature
There are various theories explaining the factors that influence
internationalization and forms of internationalization from inward to outward
situation.14 Numerous forces (i.e. firm and institutional) tend to shape the
capabilities of MNEs in the process of foreign market entry.15 Entrepreneurial
activities and capabilities of MNEs, however, are the essential building blocks in
internationalisation.16 Taking this view, our chapter focuses on and integrates two
neglected domains that affect internationalisation: transnational diaspora and civil
society into the conceptual understanding of internationalisation of MNEs. Actors
from these two domains play significant roles and complement MNE
organisational capability for internationalisation. Using a process view of
internationalisation17 we have coded the information from the international new
venture (INV) of Grameenphone, Bangladesh. In the next chapter results and
discussion illustrate how diaspora and civil society actors complement the
organisational capability of Telenor and how Telenor made reactive
internationalisation to Bangladesh influenced by Diaspora– i.e. Iqbal Quadir.
3. Discussion
Our findings present a strong evidence for the enabling role and effect of
diaspora member in the foreign market entry of Telenor and subsequently the
development of INV. Enabling roles of diaspora member (i.e. Iqbal Quadir) appear
to be a transnational entrepreneur and a manager that planned the business model,
led the consortium, convinced and guided Telenor and CS actor i.e. Grameen Bank
for the creation of INV in Bangladesh. Moreover, role of CS actor, particularly
Nobel Laureate Professor Muhammad Yunus (founder of Grameen Bank) also
appears to be both a complementary and entrepreneurial in INV creation and
operation. However, we do not rule out the enabling role of the state as to how it
also created a new rule for awarding new licences of telecoms, nor do we claim
that Telenor management did not do anything for the internationalisation in
Bangladesh. We rather illustrate that MNE appeared to be a reactive mover in the
internationalisation and INV creation in which the lead role was played by
primarily diaspora member and then CS actor. Non-market actors’ resources,
network, and entrepreneurial orientation18 complemented the organisational
capability of MNE in creating and operating INV in Bangladesh.
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Mohammad B. Rana and Maria Elo
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
The Effects of Diaspora Involvement: The key effect of diaspora originates in
the pre-internationalization phase of INV, and this is the diaspora-driven
perspective, knowledge, and expertise that stimulate the perception of the idea in
the first place. Iqbal Quadir is a highly-qualified elite diasporan, presently located
at MIT in the USA, but it is particularly his Bangladeshi origin that allows him to
understand the needs behind this business idea generation and explore its
feasibility, which would have been quite impossible for a local Bangladeshi or for
a foreign venture without the contextual understanding of the market. He also acts
in multiple professional networks and may connect to CS actors both at local and
global levels, such as Prof. Yunus from Bangladesh and Mailman from USA, to
find support for his idea. Interestingly, until stage– 3 (i.e. stage-1: firm’s
management is unaware of the opportunity, stage-2: firm management is not
interested; Stage-3: Management is not committed, but willing to explore the
unsolicited offer) it is only diaspora resources, commitment, and managerial
competency that drive the development of Grameenphone. The creation of the
business model stimulated by the COW-concept was clearly an innovation by
diaspora member, its knowledge and market-specific understanding. And this
indicates the ‘opportunity identification’ dimension of the capability concept. This
innovation and development phase illustrates well the positive effects that brain
circulation, even brain drain, may generate towards homeland development.19
Quadir became a returnee due to this business venture, and this dimension of his
active involvement indicated the ‘Kuznetzovian’ virtuous innovation cycle –
effects on his country of origin.20 Based on the substantial risk and commitment
requirements, we deduce that this kind of venture was only possible due to his
diasporanness (i.e. leading to multiple embeddedness and transnational social
network) and strong intrinsic motivation.21 This would not have continued as a
classical foreign venture building on foreign direct investments had there not been
Quadir type diaspora taken the initiative with such high commitment. The market
entry phase of internationalization illustrates how the diaspora resources and
capabilities set up by Quadir function as glue and facilitating force in business
planning and acting among the various stakeholders. Diaspora’s role and
involvement in Telenor’s entry in Bangladesh was central. Quadir’s homelandbased involvement triggered his family repatriation, which is another component of
localised commitment. The experience and knowledge resources from host and
other foreign countries are orchestrated synergistically in order to form a functional
consortium and business model, and it is the diaspora knowledge that is guiding
this allocation, not the ownership constellation. The role of diaspora in this regard
illustrates how it complemented Telenor to seize the opportunities available in
Bangladeshi market. It further indicates that Quadir’s personal involvement and
guidance to Telenor – in the process of setting up INV–helped coordinate and
control assets, and manages threats appearing from the system void and market
void of Bangladesh.22
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Diaspora networks play a very direct role in enabling the entry when the
institutions become impediments, as the connections of Prof. Yunus can overcome
the entry problems. The diaspora actor of this case is able to connect to the
involvement of an NGO who has complementary resources (i.e. distribution
network, consumer base, credit programmes, management capability to organise
the village phone programme) and similar vision (i.e. local development). Diaspora
actor had the contextual intelligence on the key CS actor who possessed social
network and power, and he knew how to motivate CS actor to involve in the
consortium. Naturally, the entering consortium was new to Bangladeshi market but
the business plan and guidance made by diaspora member complemented the
organisational capability of INV to have rapid growth in the early stage. The
foreign nature of this consortium was hybrid but the diasporic member smoothen
the entry process by alleviating its foreignness.
In the post-entry phase the ‘building of the invisible leg’ starts in real terms and
here the unique knowledge inherent in the consortium is vital. The diaspora
knowledge of market-context and respective preferences was employed for
marketing, strategy and financial management, while MNE’s management
competence was employed for establishing scientific management of the operation.
The differences seen in finance plans illustrate the discrepancy of foreign and
diasporic views and insights. In this stage, diaspora’s role directly affects MNEs to
reconfigure its asset base and supplementing MNE to enhance its organisational
capability. For example, the idea of applying for loan to IFC and its management
was solely handled by Quadir, although Telenor disagreed with the plan. However,
Telenor latter realised the effectiveness of Quadir’s plan. As the diasporic primus
motor Mr. Quadir sells his shares, the post-entry problems start to increase. We
identify multiple roles and tasks in which the diaspora dimension of Quadir has
been evident and significant, and potentially, it has also played a role as a threshold
taking the project to its next step. Interestingly, after the ownership change Quadir
and his family migrate again to the USA where he continues his work on finance
and academia. The findings illustrate not only ‘brain’ effects such as knowledge
and expertise, but also motivation and capabilities that related to his diasporanness.
Thus, we develop the following propositions for future research:
Proposition- I: Resources of high-skilled transnational diaspora
actors have a positive effect on business-innovation and concept
development of a venture, and may boost its success via reduced
foreignness.
Proposition- II: High-skilled diaspora involvement in INV has a
positive effect on organizational capabilities of MNE for entry
and internationalisation in emerging markets; not just on
diaspora entrepreneurship-firm internationalisation.
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Mohammad B. Rana and Maria Elo
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
The Effects of CS Involvement: The civil society was involved throughout the
planning of INV, taking its interests directly into consideration. Although the
impact of CS in INV creation was not as active as it was by diaspora at the preinternationalisation phase, its commitment and resource sharing with MNE directly
affected the organisational capability of MNE and creation of INV. CS directly
affected the credibility of INV, because when Prof. Yunus agreed to join the INV,
Telenor and other partners got confidence on the project. It is one of the crucial
requirements of a successful INV creation that investors have high trust on the
feasibility of the venture. Yunus’s local and global reputation helped build that
trust. His local network with the government, at that time, helped INV to get a
telecom licence. The most important contribution of CS was that it provided an
organisational platform (by offering a job) and identity to diaspora member to
organise INV creation in Bangladesh. This is because Quadir spent all his savings
on organising the INV and ran out of money to maintain his family. From
capability point of view, CS did not contribute to the opportunity identification, but
it certainly shared its existing resources to INV in a significant way. GB provided
consumer credit to its members (typically poor women) to buy cell phone from GP,
GTC– its sister company– sold talking minutes and provided post-sale service
throughout the rural areas of Bangladesh. In a word it managed the entire village
phone project. However, GB invested in the INV when diaspora and MNE were
concerned about the availability of capital for the INV in Bangladesh. This
indicates that CS helped Telenor to seize opportunities in the market and
reconfigure the resource base. Further, global CS actor–Open society foundation–
provided an interest free loan of $10 million to GB for creating GTC, so that GB
can participate in the INV. This illustrates strong evidence that CS from either
local or global context complement INV creation and thus directly affect the
organisational capability and internationalisation of MNE to emerging markets.23
Thus, the proposition we develop is:
Proposition- III: Involvement of civil society actor in INV or with
MNE helps develop innovative business idea and complements
MNE/ INV’s organisational capability to entry and sustain in a
complex emerging market context.
4. Conclusion
This internationalization process seems to be strongly diaspora-driven, as if
diasporanness was the ‘hormone system’ or primus motor of this entity. If the
diaspora actor was taken out of the process, there would have been no
internationalization process despite the international nature of the partners– i.e.
Norwegian Telenor, American Gonophone, Japanese Marubini and Bangladeshi
Grameen Bank. The role of diaspora actor directly complemented the
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organizational capability of MNEs, while involvement of CS actor critically
enabled the entry and creation of INV.
Notes
1
Simon Collinson and Glenn Morgan, eds. Introduction, Images of the
Multinational Firm (New York: Wiley, 2009), in particular see pages 1-22.
2
Christoffer Bartlett, Sumantra Ghoshal and Julian Birkinshaw, Transnational
Management: Text, Cases and Readings in Cross Border Management. 4th ed.
(Burr Ridge: McGraw-Hill, 2003).
3
John H. Dunning, ‘The Eclectic Paradigm of International Production: A
Restatement and Some Possible Extensions’, Journal of International Business
Studies 19.1(1988): 1-31; Lorraine Eden and Li Dai, ‘Rethinking the O in
Dunning’s OLI/Eclectic Paradigm’, Multinational Business Review 18.2 (2010):
13-33.
4
Jan Johanson and Jan-Erik Vahlne, ‘The Internationalisation Process of the Firm:
A Model of Knowledge Development and Increasing Foreign Market
Commitment’, Journal of International Business Studies 8.2. (1977): 23–32.
5
John Cantwell, John Dunning and Sarianna Lundan, ‘An Evolutionary Approach
to Understanding International Business Activity: The Co-Evolution of MNEs and
the Institutional Environment’, Journal of International Business Studies 41
(2010): 567–586.
6
cf. Yevgeni Kuznetsov, ‘Mobilizing Intellectual Capital of Diasporas: From the
First Movers to a Virtuous Cycle’, Journal of Intellectual Capital 9.2 (2008): 264–
282; Jennifer Brinkerhoff, Digital Diasporas: Identity and Transnational
Engagement, (New York: Cambridge University Press, 2009); Masaaki Kotabe,
Liesl Riddle, Petra Sonderegger and Florian Täube, ’Diaspora Investment and
Entrepreneurship: The Role of People, Their Movements, and Capital in the
International Economy’, Journal of International Management 1.19 (2013): 3-5.
7
See more in Tarun Khanna, ‘Contextual Intelligence’, Harvard Business Review
92.9 (2014): 58-68.
8
e.g. Maria Elo, ‘Diaspora Entrepreneurs in and from an Emerging Market:
Narratives from Uzbekistan’, (paper presented at the 12th Vaasa International
Business Conference, Vaasa, Finland, August 21-23, 2013); and Maria Elo,
‘Diaspora Networks in International Business: A Review on an Emerging Stream
of Research’, Handbook on International Alliance and Network Research, edited
by Jorma Larimo, Niina Nummela and Tuija Mainela, 13-41, Cheltenham: Edward
Elgar, 2015.
9
Kate Gillespie, Liesl Riddle, Edward Sayre and David Sturges, ‘Diaspora Interest
in Homeland Investment’, Journal of International Business Studies 30.3 (1999):
623-634.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Mohammad B. Rana and Maria Elo
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
10
Ravi Ramamurti, ‘Developing Countries and MNEs: Extending and Enriching
the Research Agenda’, Journal of International Business Studies 35.4 (2004): 277283.
11
Devesh Kapur and Ravi Ramamurti, ‘India’s Emerging Competitive Advantage
in Services’, The Academy of Management Executive 15.2 (2001): 20-32.
12
Liesl Riddle and Jennifer Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’, International Business Review 20.6
(2011): 670-680.
13
For details on Grameenphone case, see Daniel Isenberg, I Knoop and David
Lane, Iqbal Quadir, Gonophone, and the Creation of Grameenphone
(Bangladesh), (Boston: Harvard Business School Publishing, 2007).
14
e.g. Lawrence Welch and Reijo Luostarinen, ‘Inward-Outward Connections in
Internationalisation’, Journal of International Marketing 1.1 (1993): 44-56;
Richard Fletcher, ‘A Holistic Approach to Internationalisation’, International
Business Review 10.1 (2001): 25-49.
15
e.g. John H. Dunning, ‘The Eclectic Paradigm of International Production: A
Restatement and Some Possible Extensions’, Journal of International Business
Studies 19.1 (1988): 1-31; John Cantwell, John H. Dunning and Sarianna M.
Lundan, ‘An Evolutionary Approach to Understanding International Business
Activity: The Co-Evolution of MNEs and the Institutional Environment’, Journal
of International Business Studies 41 (2010): 567–586.
16
Olli Kuivalainen, Sanna Sundqvist and Per Servais, ‘Firms’ Degree of BornGlobalness, International Entrepreneurial Orientation and Export Performance’,
Journal of World Business 42.3 (2007): 253-267.
17
see, Warren J. Bilkey and George Tesar, ‘The Export Behavior of Smaller-Sized
Wisconsin Manufacturing Firms’, Journal of International Business Studies 8.2
(1977): 93-98; Johanson and Vahlne, ‘The Internationalisation Process of the Firm
– A Model of Knowledge Development and Increasing Foreign Market
Commitment’, 23–32; Michael R. Czinkota, Export Development Strategies: US
Promotion Policy (New York: Praeger, 1982)
18
Ari Jantunen, Kaisu Puumalainen, Sami Saarenketo and Kalevi Kyläheiko,
’Entrepreneurial Orientation, Dynamic Capabilities and International
Performance’, Journal of International Entrepreneurship 3.3 (2005): 223-243.
19
cf. Rosalie Tung, ‘Brain Circulation, Diaspora, and International
Competitiveness’, European Management Journal 26 (2008): 298–304.
20
Yevgeni Kuznetsov, ed. Diaspora Networks and the International Migration of
Skills: How Countries Can Draw on Their Talent Abroad (Washington: DC, World
Bank Publications, 2006); Kuznetsov, ‘Mobilizing Intellectual Capital of
Diasporas: From the First Movers to a Virtuous Cycle’, 264–282.
21
Liesl Riddle, ‘Diasporas: Exploring Their Development Potential’, Journal of
Microfinance/ESR Review 10.2 (2008): 28-35; Liesl Riddle, George. A Hrivnak,
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80
81
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and Tjai M. Nielsen, ‘Transnational Entrepreneurs in the Emerging MarketsBridging International Divides’, Journal of International Management 16 (2010):
398–411.
22
Mohammad B. Rana, ‘Rethinking Business System Theory from the Perspective
of Civil Society, Transnational Community, and Legitimacy: Strategies of
European MNCs in Bangladesh’, (PhD Thesis (Unpublished), International
Business Centre, Aalborg: Aalborg University, Denmark, 2014)
23
Mohammad Rana, Svetla T. Marinova and Olav J. Sørensen, ‘Legitimacy
Strategy in Institutional Multiplicities: Has Institutionalism Forgotten Institutional
Void and Civil Society in International Business?’ (paper presented at European
Academy of International Business (EIBA) Conference, Uppsala, Sweden,
December 11-13, 2014).
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Bilkey, Warren. J., and George Tesar. ‘The Export Behavior of Smaller-Sized
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Cantwell, John., John H. Dunning and Sarianna M. Lundan. ‘An Evolutionary
Approach to Understanding International Business Activity: The Co-Evolution of
MNEs and the Institutional Environment’, Journal of International Business
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Czinkota, Michael. R. Export Development Strategies: US Promotion Policy. New
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Multinational Firm, New York: Wiley, 2009.
Introduction, Images of the
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Mohammad B. Rana and Maria Elo
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
Dunning, John. H. ‘The Eclectic Paradigm of International Production: A
Restatement and Some Possible Extensions’. Journal of international business
studies 19.1 (1988): 1-31.
Eden, Lorraine and Li Dai. ‘Rethinking the O in Dunning’s OLI/Eclectic
Paradigm’, Multinational Business Review 18.2 (2010): 13-33.
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Conference, Vaasa, Finland, August 21-23, 2013.
———. ‘Diaspora Networks in International Business: A Review on an Emerging
Stream of Research’, Handbook on International Alliance and Network Research,
eds. Jorma Larimo, Niina Nummela and Tuija Mainela, 13-41, Cheltenham:
Edward Elgar, 2015.
Fletcher, Richard. ‘A Holistic Approach to Internationalisation’. International
Business Review 10.1 (2001): 25-49.
Gillespie, Kate, Liesl Riddle, Edward Sayre and David Sturges. ‘Diaspora Interest
in Homeland Investment’. Journal of International Business Studies 30.3 (1999):
623-634.
Isenberg, Daniel, I Knoop and David Lane. Iqbal Quadir, Gonophone, and the
Creation of Grameenphone (Bangladesh), Boston: Harvard Business School
Publishing, 2007.
Jantunen, Ari, Kaisu Puumalainen, Sami Saarenketo and Kalevi Kyläheiko.
‘Entrepreneurial Orientation, Dynamic Capabilities and International
Performance’. Journal of International Entrepreneurship 3.3 (2005): 223-243.
Johanson, Jan and Jan-Erik Vahlne. ‘The Internationalisation Process of the Firm:
A Model of Knowledge Development and Increasing Foreign Market
Commitment’. Journal of International Business Studies 8.2 (1977): 23–32.
Kapur, Devesh and Ravi Ramamurti. ‘India’s Emerging Competitive Advantage in
Services’. The Academy of Management Executive 15.2 (2001): 20-32.
Khanna, Tarun. ‘Contextual Intelligence’, Harvard Business Review, 92.9 (2014):
58-68.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
82
83
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Kotabe, Masaaki, Liesl Riddle, Petra Sonderegger and Florian A. Täube. ‘Diaspora
Investment and Entrepreneurship: The Role of People, Their Movements, and
Capital in the International Economy’. Journal of International Management 1.19
(2013): 3-5.
Kuivalainen, Olli, Sanna Sundqvist and Per Servais. ‘Firms’ Degree of BornGlobalness, International Entrepreneurial Orientation and Export Performance’.
Journal of World Business 42.3 (2007): 253-267.
Kuznetsov, Yevgeni, ed. Diaspora Networks and the International Migration of
Skills: How Countries Can Draw on Their Talent Abroad. Washington: DC, World
Bank Publications, 2006.
Kuznetsov, Yevgeni. ‘Mobilizing Intellectual Capital of Diasporas: From the First
Movers to a Virtuous Cycle’. Journal of Intellectual Capital 9.2 (2008): 264–282.
Ramamurti, Ravi. ‘Developing Countries and MNEs: Extending and Enriching the
Research Agenda’. Journal of International Business Studies 35.4 (2004): 277-283.
Rana, Mohammad. B. ‘Rethinking Business System Theory from the Perspective
of Civil Society, Transnational Community, and Legitimacy: Strategies of
European MNCs in Bangladesh’, PhD Thesis (Unpublished), International
Business Centre, Aalborg, Aalborg University, 2014.
Rana, Mohammad B., Svetla T. Marinova and Olav J. Sørensen. ‘Legitimacy
Strategy in Institutional Multiplicities: Has Institutionalism Forgotten Institutional
Void and Civil Society in International Business?’. Paper presented at European
Academy of International Business (EIBA) Conference, Uppsala, Sweden,
December 11-13, 2014.
Riddle, Liesl. ‘Diasporas: Exploring Their Development Potential’. Journal of
Microfinance/ESR Review 10.2 (2008): 28-35.
Riddle, Liesl and Jennifer Brinkerhoff. ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’. International Business Review 20.6
(2011): 670–680.
Riddle, Liesl, George. A. Hrivnak and Tjai M. Nielsen. ’Transnational
Entrepreneurs in the Emerging Markets: Bridging International Divides’. Journal
of International Management 16 (2010): 398-411.
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Mohammad B. Rana and Maria Elo
Diaspora, Civil Society Actors and Emerging Market Entry
__________________________________________________________________
Tung, Rosalie. ‘Brain Circulation, Diaspora, and International Competitiveness’.
European Management Journal 26 (2008): 298–304.
Welch, Lawrence and Reijo Luostarinen. ‘Inward-Outward Connections in
Internationalisation’. Journal of International Marketing 1.1 (1993): 44-56.
Mohammad B. Rana holds a PhD in International Business (IB) from
International Business Centre (IBC), Aalborg University, Denmark, an MSc in IB
from the University of Stirling, UK, and an MBA in Marketing from the University
of Rajshahi, Bangladesh. He is an Assistant Professor of International Business at
the IBC, Aalborg University. His research lies in institutionalism and business
systems, MNE strategies in emerging markets, and internationalisation of firms.
Maria Elo holds a PhD in Economics, Åbo Akademi University, Finland. She is a
post-doctoral researcher at Turku School of Economics, Finland and a Migration
Fellow at the Institute of Migration. She is the founder and leader of the Diaspora
Networks in International Business- research platform. Her research focuses on
international business and diaspora. Her work is published in books and journals,
such as Industrial Marketing Management.
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84
Diaspora Networks, Roles and Social Capital
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Part III
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Erez Katz Volovelsky
Abstract
During the last 23 years, the numbers of Jewish entrepreneurs in Shanghai has
increased. In the course of their business activities, the Jews practice and
demonstrate their social and cultural capital in various ways. In this chapter, I
present the social and cultural capital of the Jewish entrepreneurs in Shanghai.
Key Words: Social capital, Cultural capital, Chabad, Shanghai, Judaism.
*****
1. Introduction
Since the 19th century, Shanghai has supported a recognizable Jewish
community. During World War II, a small number of Jews left Germany for
Shanghai. These Jews enjoyed economic benefits and managed to establish
themselves successfully. At that time there was no control on immigration; it was
easy for Jews to enter Shanghai. The highest wave of Jewish immigration to
Shanghai occurred in1939. Over the years, 20,000 Jews arrived in Shanghai.
In1949, after the civil war, the Communist party took control of China and
made life difficult for everyone, including the Chinese themselves. The
Communists were specifically against Westerners (e.g., Americans. British,
Australians) and gradually closed down or confiscated businesses, homes, and
schools. Life came to a standstill for foreigners. As a result, they had no alternative
but to leave, not just Shanghai, but China as a whole.1
Starting at the end of the 1970s, China started to open up to foreigners again; in
1992 Israel and China signed a diplomatic agreement and soon after that, the
General Consulate of Israel was opened in Shanghai. The number of Israeli
companies in Shanghai increased with a variety of services offered. Public
companies and a growing number of private entrepreneurs opened various
businesses in Shanghai. These entrepreneurs can be seen in trade, manufacturing,
professional consulting, and others.
Today, there are about 2500 Jews who live in Shanghai.2 They enjoy a rich
Jewish cultural life based on four Chabad centres, Kehilat Shanghai (an
organization of Liberal, Reform, Conservative, Reconstructionist, and unaffiliated
Jews) and a Sephardic centre. Jews meet on a regular basis as well as on Jewish
holidays. From time to time the Israeli consulate also organizes events for Jewish
families and individuals who live in Shanghai.3
At present Shanghai is one of the largest cities in China (estimated population:
over 24 million people in 2014) and it enjoys a direct controlled municipality. It is
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The Impact of Social and Cultural Capital on Jewish
Entrepreneurship Business Activities in Shanghai
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
a global financial centre and a transport hub with the world's busiest container
port.4 Today China is not an immigration country – foreigners generally are not
eligible for citizenship. Therefore, they go there as sojourners. Siu defined a
sojourner as ‘…a stranger who spends many years in his lifetime in a foreign
country without being assimilated by it…’5 for the purpose of making money and
returning to the home country. The Jews of Shanghai are a unique group of
sojourner entrepreneurs and social and cultural capital play an important role in the
way they build, manage and develop their business in Shanghai.
2. Social Capital
Fukyuama, Baron and Markman, Laleh, Davidsson and Honig, and Putnam all
describe the creation of social capital through the connection of some people with
the purpose of cooperation.6 This connection assists entrepreneurs in achieving
their business goals. Putman adds the idea of two components that arise from
social capital: reciprocity and trustworthiness.7
According to Bourdieu, social capital consists of the financial and
informational resources available in relational networks that provide the owner of
social capital competitive advantages (cited in Gedajlovic, Honig, Moore, Payne,
and Wright).8
According to Savioli, there are three dimensions in social capital. There are (1)
structural dimensions which are social relations shaped by organizations,
institutions and the modes of leadership; (2) relational dimensions which consist
of trust, norms and identity among the members; and (3)cognitive dimensions
whereby members in the same social group share the same mental processes
(thanks to the same language, stories and culture).9
Putman emphasizes that social capital is built through connections between
individuals who offer reciprocity and trust.10 In order for a society to be rich in
social capital, the individuals who build it need to be in a dense network of social
relations. Jack and Anderson talk about social capital as a process that links
individuals, so that networks are a series of bridges that link people.11 Coleman12
claims that like any kind of capital, social capital needs to be renewed or it would
diminish. Coleman adds that social capital can take on three forms: (1) obligations
and expectations which depend on the trustworthiness of the social environment;
(2) the capacity of information to flow through the social structure in order to
provide a basis for action; and (3) the existence of norms accompanied by
effective sanctions.13 Unlike Coleman, who presents a more sociological point of
view and Putnam who presents a political perspective, Fukuyama’s contribution to
the social capital theory is a focus on trust.14 It can be noted that whereas Coleman
and Bourdieu consider the individual as the one who develops social capital,
Putnam talks about communities that develop social capital: ‘…networks, norms,
and trust that enable participants to act together more effectively to pursue shared
objectives’.15
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According to Adler and Kwon, these are the areas where social capital
impacts:
-
Influences career success.
Helps workers find jobs.
Relieves inter-unit resource exchanges and product
innovation.
Reduces turnover rates, eases entrepreneurship and the
opening of start-up companies.
Intensifies the relations with the suppliers, regional
production networks and inter-firm learning.16
Jewish social capital is actualized in various ways among the Jews in
Shanghai; the following social places and opportunities (which represent
occasions for redeeming social capital) exist in Shanghai and are for the most part
closed to non-Jewish people: religious clubs (e.g. Kehilat Shanghai, the Jewish
Sephardic community, the Chabad centres, the trade centre [associated with the
Israeli consulate], social meetings in Israeli cuisine restaurants and other social
meetings organized by the Israeli/Jewish community). No doubt the three Chabad
locations in Shanghai (Century Park Area, Jing An Area, Hong Qiao Area) are the
most powerful and influential sources of social capital for the Jews in Shanghai;
they organize Friday night dinners on a weekly basis where only Jewish people
(both religious and secular) can participate. These dinners are an excellent
opportunity to meet people and exchange useful contacts and ideas. Some of the
people who go to the events which are organized by Chabad do not practice
Judaism in their home countries but knowing there is a Chabad organization where
they live increases their self- esteem. Chabad runs educational programmes for
children of different ages on Sundays and during the summer time. In addition to
the educational programmes, it gives the parents an opportunity to meet and
exchange ideas and information. Interestingly, although other western religions
are recognized by the Chinese government, Judaism is not. Religious services take
place at other venues, but not in the synagogue in Shanghai which is controlled by
the government and opened at the initiative of the Chinese authorities for official
visits and events.
From the perspective of entrepreneurship, the Chabad organization in
Shanghai is very interesting as it is an example of enclave entrepreneurship.17 It
provides various religious services only to Jewish people: Shabbat and holidays
meals and services, kosher food services (an online mini market, the Shanghai
Jewish Centre Restaurant in the Hong Qiao area, and a snack corner in town). The
Rabbis maintain their centres through their salaries as kosher food inspectors and
donations. Their contacts with the host society are limited to non-business issues.
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Erez Katz Volovelsky
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
3. Cultural Capital
According to Edewor and Aluko, culture should be regarded as ‘the set of
distinctive, spiritual, material, intellectual and emotional features of society or a
social group, and that it encompasses, in addition to art and literature, lifestyle,
way of living together , values systems, traditions and beliefs’.18 According to
Bourdieu, cultural capital is one of the three main forms of capital that people
possess (The two others are social capital and symbolic capital). Cultural capital
exists in the following forms:
-
-
Embodied culture capital manifests itself in the aesthetic,
cognitive and moral preferences, propensities, standards,
norms, routines and habits that govern the collective
behaviour of individuals.
Objective cultural capital is expressed in cultural goods and
objects such as works of art, books, machines and
instruments.
Institutional cultural capital involves places of learning
where knowledge may be acquired and credentials obtained.19
4. Cultural Capital and Business
There is considerable diversity both between and within immigrants groups,
and a variety of circumstances affect not only the quality and quantity of the
cultural resources that individuals have at their disposal but also the extent to
which they are able to draw on them for economic advantages. Watts, Trlin, White
and North mention age, gender, social class, education and family situation as
some of the factors that have a bearing on the possession of or access to cultural
capital.20
There are a number of culturally related resources that produce economic
outcomes:21
1. Multilingual language skills: immigrants who speak an
additional language (besides English) can cater to the needs
of local ethnic communities but also in promoting trade links
and tourism ventures involving countries where the languages
are spoken.
2. Educational background: immigrants may have gained
advanced business qualifications and professional training
pre-migration.
3. Work experience: immigrants with pervious business
experience in their country of origin, (or in other countries
where they have resided) are likely to possess insights into
the business environment in these countries, including
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knowledge of the regulatory systems involved as well as an
understanding of the cultural context in which business
operates.
4. Family and friendship connections in countries of origin:
immigrants with extensive networks of family and friends in
their home countries. These connections and networks have
competitive potential in assessing marketing opportunities as
well as in making connections with suppliers and clients.
5. Links with co-ethnics in the host country: ties with those
whom they have cultural affinity in the host country can
provide support and encouragement for immigrants
embarking on entrepreneurial activities. Contact is made
through ethnic associations, church groups and the rest may
be a source of advice and, in some cases, financial assistance.
This is particularly relevant to Jews in Shanghai who meet in
exclusive places like in Chabad centres or the Israeli Business
Centre (which is associated to the General Consulate) and
they exchange ideas, information about the host society
regulations and might meet people who later can assist them
financially.
6. Attitudes, values and beliefs. The cultural backgrounds of
immigrants may favour business enterprise through diligence,
integrity and preparedness to take calculated risks. The
Halabis Jews, whose origins are in Syria, encourage their
offspring to enter business activities rather than complete
university studies. This phenomenon is unusual among the
Jewish sojourners, but presents an example of the diversity of
the Jewish community.
Judaism has a long rich history on issues in business ethnics and business laws.
Over 100 of the 613 Jewish commandments that have been set out in the Bible
(Jewish Torah) deal with matters of economic life. Orthodox Jews follow these 613
commandments strictly. However, conservative Jews (those who identify with this
stream of Judaism have varying degrees of observance of tradition) and those Jews
who shape their life by contemporary secular ethical precepts (and pay only
occasional attention to the tradition) are also influenced by some of these
commandments. Green lists some of the most important of these:
1. The legitimacy of business activity and profit: As long as the
business is according to the framework of the Jewish
religious and ethical norms, there are no laws/regulations
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Erez Katz Volovelsky
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
2.
3.
4.
5.
6.
7.
against purchasing items and there is an understanding that
commercial activity may bring profits.
Social welfare: There is the idea of giving economic support
to the needy (widows, orphans, elderly people. etc.)
Limits on prices and reasonable profits to protect consumers
from exploitation: There are prohibitions on lending at
interest among co-religionists and the importance of
protecting the natural environment.
Importance of human life: There is a prohibition against the
endangerment of human life and encouragement to make
efforts to prevent harm to others.
Protecting consumers from harm: There is a prohibition
against selling of products which may endanger consumers.
Avoiding fraud and misrepresentation: There is an insistence
on honesty and a prohibition against active deception.
Judaism permits and approves of business activity conducted
within a framework of religious and ethical norms. In
Judaism there is no tradition of asceticism and/or mistrust of
material goods and commercial life. It is allowed and
legitimate to be involved in the global business world and of
course it is an option to earn money.22
In addition to the 613 commandments, the Talmud, another Jewish source for
observance, adds to the social welfare legislation with some of the following
points:
1. Limits are put on prices and profits: clients should not be
exploited
2. Protecting clients: prohibition from selling a client a product
which is damaged or/and might harm the client. The seller is
responsible for the products sold even beyond the written
time of the guarantee.
3. Avoiding deception and misrepresentation: a seller needs to
perform with honesty and disclose all needed information to
the client.23
Eight Basic principles of Jewish business ethics are proposed by Prof. David
Golinkin24 These include the use of accurate weights and measures. This rule
comes from the Biblical book of Leviticus (19:35-36): ‘You shall not falsify
measures of length, weight, or capacity. You shall have an honest balance, an
honest weight…’ Other principles include a limit on profits, injunctions against
deception in general and false labelling in particular, and injunctions against all
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kinds of fraud. Finally, there are principles that indicate the need to treat clients
with respect and obey the local laws.
5. Jewish Cultural Capital in Shanghai
According to the perspective of many Chinese who have had contact with
Jews, the Jewish people are considered a broad-minded people; they are thought to
be informed and educated (often with advanced academic and professional
degrees). They are often known to have proven experience in business and
relevant management fields. They have usually worked as managers at various
levels of management for several years before they became entrepreneurs, very
often in China but sometimes in other countries as well. This cultural capital as a
common denominator creates a certain connection among the Jews that impacts on
business development and entrepreneurship.
My on-going research has revealed that socioeconomically, Shanghai Jews are
very uniform. The social capital which is actualized in their many institutions and
organizations is intricately intertwined with their cultural capital
In general, the foreign entrepreneurs and the local Chinese business community
do not mix. In this, Jews are much like their sojourner entrepreneur counterparts.
They do not attempt to integrate into or participate in local Chinese culture. Like
other sojourners, their cultural choices in entertainment and leisure time activities
are western in flavour. However, Jews have their own niche within the sojourner
community, with quality exclusive educational, cultural, and culinary programmes
and events.
6. Conclusion
The traditions, laws and customs of the Jews comprise their cultural capital.
This cultural capital is mainly played out and practiced in the institutions,
organizations and events that comprise the social capital of the Jews of Shanghai.
For example, the Passover Seder, an example of cultural capital, is a religious
event that takes place in many homes and Jewish centres in the city. It is a
holiday/event that teaches about freedom, education, compassion, justice and
many other values.
The closed community life with its unique characteristics has created a form of
Jewish social capital in Shanghai. This social capital is mainly seen in Chabad
centres and in the Kehilat Shanghai where people gather on a regular occasions,
pray together, eat and exchange ideas while building their networks. My current
research aims at depicting the unique social and cultural capital of the Jewish
sojourner entrepreneurs in Shanghai.
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Erez Katz Volovelsky
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
Notes
1
Yanjie Bian, Xiaoling Shu and John R. Logan, ‘Communist Party Membership
and Regime Dynamics in China’, Social Forces 79.3 (2001): 805-841; Dalia Ofer,
‘The Israeli Government and Jewish Organizations: The Case of the Immigration
of Jews from Shanghai’, Journal of Israeli History 11.1 (1990): 67-80 Sigmund
Tobias, Strange Haven: A Jewish Childhood in Wartime Shanghai. (Champaign, Il:
University of Illinois Press, 1999).
2
Interview, Shanghai Chabad Rabbi Shalom Greenberg, September 2015.
3
Chabad is an international Jewish Chassidic organization that has outreach as one
of its main features. In many cities in every corner of the world Chabad maintains
centres which serve students, travellers and the local population with Jewish social
and cultural capital. It offers educational resources, kosher food, prayer services,
wedding ceremonies, and holiday events. Due to its nature and objectives, the
Chabad centre is closed to non-Jews.
4
‘2014 Shanghai Economic and Social Development Statistical Bulletin [In
Chinese]’, Shanghai Bureau of Statistics, 2015 February. Viewed on 5 January,
[Shanghai Economic and Social
2016, 2014
Development Statistical Bulletin 2014]; ‘Ever wondered how everything you buy
from China gets here? Welcome to the port of Shanghai - the size of 470 football
pitches’, Mail Online.October 29, 2013. Viewed 5 January , 2016,
http://www.dailymail.co.uk/news/article-2478975/Shanghai-port-worlds-busiesthandles-736m-tonnes-year.html; ‘Global Financial Centres Index 18’, The
Financial Centres Future,
September 2015, Viewed 1 January, 2016
http://www.longfinance.net/images/GFCI18_23Sep2015.pdf
5
P.C. Siu, ‘The Sojourner’, American Journal of Sociology 58.1 (1952): 34-44.
6
Francis Fukuyama, ‘Social Capital, Civil Society and Development’, Third World
Quarterly 22.1 (2001): 7-20; Robert Baron and Gideon Markman, ‘Beyond Social
Capital: The Role of Entrepreneurs’ Social Competence in Their Financial
Success’, Journal of Business Venturing 18.1 (2003): 41-60; R.S. Laleh, ‘Study on
Relationship between Social Capital and Entrepreneurship’, Journal of Basic and
Applied Scientific Research 2.8 (2012): 7719-7726; Per Davidsson, and Bensen
Honign, ‘The Role of Social and Human Capital among Nascent Entrepreneurs’,
Journal of Business Venturing 18.3 (2003): 301-331; Robert D. Putnam, ‘The
Strange Disappearance of Civic America’. 1995. Viewed on 1 August 2015.
http://xroads.virginia.edu/~HYPER/DETOC/assoc/strange.html.
7
Putnam, ‘The Strange Disappearance of Civic America’.
8
Pierre Bourdieu, ‘The Forms of Capital’, Handbook of Theory and Research for
the Sociology of Education, ed. John Richardson (New York: Greenwood, 1986),
241-258; Eric Gedajlovic, Bensen Honig, Curt B. Moore, Tyge Payne and Mike
Wright, ‘Social Capital and Entrepreneurship: A Schema and Research Agenda’,
Entrepreneurship Theory and Practice 37.3 (2013): 455-478.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
94
95
__________________________________________________________________
9
Marco Savioli, ‘Social Capital, Institutions and Policy Making’. n.d. Viewed on 5
June 2015. http://amsacta.unibo.it/3945/1/SCpolicy.pdf.
10
Putnam, ‘The Strange Disappearance of Civic America’.
11
Sarah L. Jack, and Alistair R. Anderson, ‘The Effects of Embeddedness on the
Entrepreneurial Process’, Journal Of Business Venturing 17.5 (2002): 467-487.
12
James Samuel Coleman, ‘Social Capital in the Creation of Human Capital’,
American Journal of Sociology 94 (1988): 95-120.
13
Ibid., 95-120.
14
Putnam,‘The Strange Disappearance of Civic America’; Francis Fukuyama,
‘Social Capital, Civil Society and Development’, Third World Quarterly 22.1
(2001): 7-20.
15
Coleman, ‘Social Capital in the Creation of Human Capital’; Bourdieu, ‘The
Forms of Capital’.
16
Paul S. Adler, and Seok Woo Kwon, ‘Social Capital: Prospects for a New
Concept’, Academy of Management Review 27.1 (2002): 17-40.
17
Alejandro Portes and Robert Manning, ‘The Immigrant Enclave: Theory And
Empirical Examples’. 2008 Viewed 5 August 2015.
http://www.nyu.edu/classes/jackson/analysis.of.inequality/Readings/Portes%20%20Immigrant%20Enclave-Theory%20and%20Empirical%20Examples%20%2086.pdf.
18
Patricj A Edewor and Yetunde A Aluko. (2007). Diversity Management,
Challenges and Opportunities In Multicultural Organizations. The International
Journal of Diversity in Organizations, Communities & Nations 7.7 (2007): 189.
19
Bourdieu, ‘The Forms of Capital’.
20
Noel Watts, Andrew Trlin, Cynthia White, and Nicola North, ‘Immigrant
Cultural Capital in Business: The New Zealand Experience’, Handbook Of
Research On Ethnic Minority Entrepreneurship: A Co-Evolutionary View on
Resource Management, ed. Leo-Paul Dana Cheltenham (UK: Edward Elgar
Publishing, 2007), 729-743.
21
Watts, Trlin, White and North, ‘Diversity Management’, 731.
22
Ronald M. Green, ‘Guiding Principles of Jewish Business Ethics’, Business
Ethics Quarterly 7.2. (1997): 21-30.
23
Ibid.
24
David, Golinkin, ‘Eight Basic Principles of Jewish Business Ethics’, 2003.
Viewed on 17 August 2015. http://www.schechter.edu/insightIsrael.aspx?ID=59
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Erez Katz Volovelsky
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
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Chinese]’. Shanghai Bureau of Statistics. 2015 February. Viewed on 5 January,
[Shanghai Economic and Social
2016. 2014
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Concept’. Academy of Management Review 27.1 (2002): 17-40.
Baron, Robert and Gideon Markman. ‘Beyond Social Capital: The Role of
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Business Venturing 18.1 (2003): 41-60.
Bian, Yanjie, Xiaoling Shu, and John R. Logan. ‘Communist Party Membership
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Davidsson, Per and Honig, Bensen. ‘The Role of Social and Human Capital among
Nascent Entrepreneurs’. Journal of Business Venturing 18.3 (2003): 301-331.
Edewor, Patricj A. and Yetunde A Aluko. Diversity Management, Challenges And
Opportunities In Multicultural Organizations. The International Journal of
Diversity in Organizations, Communities & Nations 7.7 (2007).
‘Ever wondered how everything you buy from China gets here? Welcome to the
port of Shanghai - the size of 470 football pitches’.Mail Online.October 29, 2013.
Viewed 5 January 2016,
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Fukuyama, Francis. ‘Social Capital, Civil Society and Development.’ Third World
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Jack, Sarah L., and Alistair R. Anderson. ‘The Effects of Embeddedness on the
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Laleh, R. S. ‘Study on Relationship between Social Capital and Entrepreneurship’.
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Light, Ivan and Leo Paul Dana. ‘Boundaries of Social Capital in Entrepreneurship’.
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Ofer, Dalia. ‘The Israeli Government and Jewish Organizations: The Case of the
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Portes, Alejandro, and Robert Manning. ‘The immigrant Enclave: Theory and
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Champaign, IL: University of Illinois Press, 1999.
Savioli, Marco. ‘Social Capital, Institutions and Policy Making’. n.d. Viewed on 5
June 2015. http://amsacta.unibo.it/3945/1/SCpolicy.pdf.
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Erez Katz Volovelsky
The Impact of Social and Cultural Capital on Jewish Entrepreneurship
__________________________________________________________________
Siu, P. C. ‘The Sojourner’. American Journal of Sociology 58.1 (1952): 34-44.
Watts, Noel, Andrew Trlin, Cynthia White, and Nicola North. ‘Immigrant Cultural
Capital in Business: The New Zealand Experience’. Handbook Of Research On
Ethnic Minority Entrepreneurship: A Co-Evolutionary View on Resource
Management, edited by Leo-Paul Dana, 729-743. Cheltenham, UK: Edward Elgar
Publishing, 2007.
Erez Katz Volovelsky (BA in East Asian studies, Tel Aviv university, 1997;
MBA, Webster University, 2001; Chinese language, Beijing Language and Culture
University, 1998). He has worked in the Chinese market in various sales positions
(1998-the present). He is currently a PhD student at the Open University of
Holland and teaches at Tel Hai Academic College in Israel. His areas of research
are: the Chinese economy, Chinese business culture, and marketing to China.
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98
Maria Elo and Victor Mollel
Abstract
Diasporans have been acknowledged as important source of labor, bridge builders
for international business and innovation, and agents for institutional change and
betterment. The importance of diasporans for international economy as talent flow
and economic element is emphasized on the macro-level, while many relevant
micro-level aspects of the diaspora business phenomenon have remained
underexplored. For example, there is very little understanding how diasporans are
approached as customers, as target markets by firms. On the other hand, cultural
studies point out how significant cultural aspects and institutions are for
diasporans, and in fact, they may form the basis for novel businesses. The case
study of Thamel1 illustrates how diaspora may trigger innovative businesses in
which diaspora roles are multifaceted. There are indications that institutions such
as funerals and cemeteries are highly specific and relevant even as location
advantages for other activities. Final repatriation is a form of return to the
homeland. The purpose of the study is to explore how diaspora status in the end of
life cycle is conveyed into a business model that targets explicitly diasporans and
their particular diasporic needs from a marketing perspective. We ask, what is the
role of ‘diasporanness’ in such business? Three case studies that target diasporans
and their final repatriation indicate that cemeteries and funeral services are a niche
market service that serve the belonging and the diasporic identity, but also relate to
the remaining family and its expectations. The findings illustrate that diasporic and
religious idiographic features affect the evolution of novel service but that tourisms
has also influenced the service development. We suggest that both policy makers
and businesses take these final wishes seriously and integrate them into a more
holistic life cycle framework.
Key Words: Diaspora, culture, innovation, service, migrants, innovative business,
identity, location, religion, funeral, final repatriation.
*****
1. Introduction
Diasporans have been acknowledged as important source of labor, bridge
builders for international business and innovation, and agents for institutional
change and betterment.2 The importance of diasporans for international economy
as talent flow and economic element is emphasized on the macro-level,3 while
many relevant micro-level aspects of the diaspora business phenomenon have
remained underexplored. Kumar and Steenkamp point out the relevance in
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Diasporans as Target Market- Service Innovations for
Final Repatriation
__________________________________________________________________
marketing but beyond that there is still very little understanding how diasporans are
approached as customers, as target markets by others.4 The case study of Thamel5
explores the meaning of diaspora for innovative service and business creation.
Cultural traditions and institutions such as funerals and cemeteries can be highly
interesting and relevant for business and location-related development due to their
multifaceted impact.6 Death is a cultural and social issue and one form of
repatriation but also a business.7 Migrants constituted already in 2013 over 232
million people8 and basically all of them are potential customers in some form.
Therefore, it makes sense to ask how diaspora status in the end of life cycle is
conveyed into a business model that targets explicitly diasporans and their
particular diasporic needs, and how this serves as a service innovation.
Service offerings address customer needs and diasporans have particularities in
their needs and international context. Noted by Miles as a solution aimed at
overcoming existing service characteristics, service innovation can be defined as
means of addressing and fulfilling service requirements status quo.9 Jaakkola,
Helkkula and Aarikka-Stenroos conceptualize collective service experience cocreation and postulate implications related to respective social interaction.10 In the
case of the natural turn of events discussed in this paper, service innovation is seen
as a valuable solution provided to the diaspora community's need to accomplish
cultural requirements for deceased members, including final repatriation. Thus, the
customer here is often a collective social entity of family and relatives, and in the
context of diaspora the customer’s location may vary or be transnational.
Additionally, diasporans play a crucial role in the service innovation's emergence
as they represent one key source of inspiration and information for the desired
innovative outcome.11 The Finnish funding agency for innovation, Tekes, defines
service innovation as being ‘a new or significantly improved service concept that is
taken into practice’.12 Examples of such concepts may fall under any of the service
provider's activities, such as customer interaction and acquisition to fulfilling
tailor-made requests from the end user. The agency highlights that service
innovations in the services sector tend to lean towards non-technological
improvements rather than technology-based innovations. Final repatriation services
are complicated, expensive, emotionally-loaded but also strongly influenced by the
inherent collectively-experiential nature of value in comparison to classic
individual level value.13
Religion and customs play a significantly more important role to individuals of
the developing world than those belonging to the developed world. The latter is
general known for its liberal ways which are arguably key to apathy towards
religion. Bendavid14 highlights the alarming decline in numbers of memberships to
churches across a once Christian-nurtured continent, Europe, rapidly evolving to
secular beliefs. Evidently, religion bound faith in the west is on speedy decline.
The notion however could not be more different in the developing world
illustrating its inherent potential. Stastna questions weather economic gains pose a
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100 Diasporans as Target Market-Service Innovation for Final Repatriation
101
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direct decline in religious faith.15 Dismal church memberships, and thus financial
contribution are forcing churches in Europe to sell off assets. Meanwhile in Africa,
home to a number of the world's poorest nations, religion is flourishing. Paul
credits dysfunctional psychosocial conditions to religions ability to thrive in the
developing world.16 Both Islam and Christianity are widespread throughout the
African continent with adaptations to indigenous and cultural context systems.
Diaspora Muslims face various difficulties related to death whether from Africa or
elsewhere.17 Mbiti credits religion as being the key shaping agent for the African
people’s character and culture.18 Highlighting African's notoriously-religious ways,
he attests the role played by religious beliefs in the daily existence of the African
people. It is therefore understandable why African's have a high tendency in
believing that human life continues once deceased. Funerals are thus extremely
important proceedings aimed at preparing one for the afterlife.
African repatriations are deemed to be culturally significant as they re-member
and re-incorporate diasporans into their collective culture.19 The majority of the
African diaspora have the majority of their family members in their original home
countries. Logic would therefore dictate that in a society where the general belief
entails afterlife activities, the deceased would be laid to rest in close proximity to
his/her family. This is claim is however not limited to religious Africans. It is
commonplace for the dead to be remembered through, but not limited, to visits to
their final resting places. As the period between the time of death and burial is
culturally significant to the African community20, we can thus affirm the services
provided by the mentioned actors in this paper as being customer driven service
innovations.
We present three cases indicating that funeral services and cemeteries are a
niche market service that serve the diasporic belonging and identity, but also relate
to the remaining family and its expectations.
The paper is organized as follows, first it provides a short overview to diaspora
literature. Second, it shortly describes the case study approach. Third, it presents
the cases and findings, and finally it introduces propositions and discusses
conclusions for theory refinement, management and policy making.
2. Theoretical Framework
Diaspora is an economic actor. Diasporas generate ethnic businesses and
develop their countries of origin,21 for example, with investments and
remittances.22 Diasporas also create a customer base, commonly researched from
the lenses of ethnic minorities and ethnic enclaves generating markets of their own.
Marketing to diasporas is becoming increasingly important.
Diaspora is more than a bridge, as it also creates bonds that facilitate
entrepreneurial and business activities,23 diaspora diffuses innovation and
disseminates ideas. Beyond that, diaspora related knowledge provides advantages
for marketing. Kumar and Steenkamp investigated some savvy companies that
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Maria Elo and Victor Mollel
__________________________________________________________________
have followed emigrants from their homelands, concentrating on countries that
host them in sizable numbers.24 Their study points out that the United States has 32
million Mexican-Americans; Germany, 4 million residents of Turkish descent; and
the UK, 3 million South Asians, and that although not all the members of a
diaspora warm to companies or brands from home, emerging giants may identify
those that are likely to be receptive. However, those who are receptive can form
target groups that act as springboards for growing revenue and gaining brand
recognition before breaking out into the mainstream. Therefore, diasporas are not
only actors, but also target customers with their knowledge and social networks, as
Kumar and Steenkamp note (see A in Figure 1). This is particularly interesting for
emerging-market companies to tap, but is not limited to them. The phenomenon of
global diaspora is growing and the purchasing power and income of diasporans is
higher than perceived in often biased discussion. Since 2000, the number of firstgeneration immigrants worldwide has risen sharply, from 150 million to
—a 42% increase.25
Theoretically, we point out that diasporans need to be conceptualized as target
markets and not only as flows of brain, labor or remittances. We were unable to
identify any theory explaining diaspora business from a buying perspective. We
deduce that diaspora customer can be a distinct target market and business type
(business to diaspora, b2d), and a ‘buyer’, like businesses are in b2b business and
this includes individual and collective actors (see C in Figure 1). One reason to the
theoretical gap may originate from the problem of understanding what diaspora
customer actually is as this customer category is not homogenous or static.26 On
the contrary, diaspora identity is in a state of flux and this influences their
behavior.27 Diasporas act in multifaceted ‘spaces’ and often have transnational
characteristics28 that reach beyond nation state.29
Therefore, it may be overly difficult for a mono-cultural marketer to gasp the
essence of value creation and build a unique selling proposition incorporating the
homeland dimension (see B in Figure 1). Thus, the creation of this service
innovation is theoretically interesting (see D in Figure 1).
3. Methodological Approach
This study is designed to explore and describe the creation of service
innovation targeted to diaspora employing case study method with builds on the
approaches Stake30 and Piekkari and Welch31 suggest for novel, complex and
interpretative cases. Three unique cases address diaspora target customers and
provide novel understanding on gradual development of diaspora as target group
and the concept of service innovation in this context. The cases are purposefully
selected to represent different suppliers of service offerings: home country located
inward services, host country located outward services and host country located
local services. Based on the framework (Figure 1) suitable cases having service
offerings for final repatriation are identified employing internet and newspapers as
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102 Diasporans as Target Market-Service Innovation for Final Repatriation
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sources. Then, primary and secondary data are collected and analysed. The
secondary data is collected via internet, company websites, newspapers and
advertisement. The primary data is collected directly from the focal case company
and local stakeholders.
Figure 1: The theoretical framework. © 2015.
Courtesy of Maria Elo and Victor Mollel.
4. The Cases
4.1 Case 1. Corona Funerals in Tanzania
Established in 1998, Corona Funerals renounces itself for providing full
international repatriation services, specifically aimed at for the diaspora
community, and outbound repatriations from Tanzania, in addition to serving the
funeral market locally. Based in Dar es Salaam, Tanzania, Corona Funerals
additionally handles all formalities with the local government and foreign
consulates as means of attaining the formal required documentation for
international repatriation. Corona was founded by a French national who saw the
need for establishing credible funeral services in the country. At the time, Corona
dealt more with repatriation of foreigners who had passed away in Tanzania. The
increase of the Tanzanian diaspora community later enabled the firm to offer
inbound repatriation services particularly for Tanzanian global diaspora, where the
US and the UK represent important target markets due to the size of Tanzanian
diaspora. The firm serves numerous faiths and cultures. Keeping in line with the
Tanzanian tradition of financial contribution from friends and relatives towards the
cost of funeral arrangements, Corona Funerals offers disporans the ability to
contribute by purchasing funeral-related products and services through its online
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Maria Elo and Victor Mollel
__________________________________________________________________
system and on-line catalogue. This online service is specifically aimed at
diasporans who are unable to physically travel back to Tanzania in time for a
funeral. It also enables the financial contribution of them regarding the funeral.
However, the service is limited to the event of funerals and does not extend beyond
it to other traditions taking place ‘post-sales’, this social part of extended funerals
remains a family issue.
The location of the company is in Tanzania, but its business services are global
and target various diasporas, having multiple directions toward final repatriations.
This service range is also clearly indicated on the company’s website.32
4.2. Case 2. Jokelan Hautaustoimisto Oy in Finland
Jokelan Hautaustoimisto Oy represents a classic Finnish family firm that has
grown organically since its establishment in 1923. It offers a full-scale service
funeral services including international repatriation. It started to follow the needs
of increasingly mobile market early on. Previously, the documentation for
international cases was carried out by partners in the capital while the rest of
services were local in Rovaniemi. Interestingly, the company had a strategic
position in the city Rovaniemi that offered global air line connections and a central
location for autopsy procedures in Finnish Lapland. This location advantage was
amplified by the effect of Lapland tourism on international repatriation. However,
for the last five years only the Helsinki-Vantaa airport is dealing with international
repatriation services and thus the location advantage has diminished. The partner
and service network in Finland and abroad is vital for final repatriation services.
Additionally, good connections to officials and partner companies enable global
repatriation services further. This company cooperates a lot with insurance
companies and offers them neutral services. But, when there is a family that
expresses preferences related to culture and religion these are taken into
consideration case-by-case.
Their final repatriation for diasporans is a relatively new service innovation
after targeting tourists first but the market has internationalized and internet and
email has enabled efficient communication. In this competition customized
services creating value for the collective customers is vital.
4.3. Case 3. City of Wuppertal in Germany
The city of Wuppertal and its cemetery pilot project is behind the change in law
which takes the Muslim and Jewish funeral preferences into account and allows
them to be practiced in Germany. Previously, despite millions of non-Christian
migrants in Germany, there was no possibility to practice and follow the culturalreligious funeral norms that did not match the Christian way of burial. Thus, the
city of Wuppertal attempts to provide an alternative to final repatriation by creating
a Muslim- and Jewish norm compatible cemetery and funeral offering. Its purpose
is to be the first integration city where the complete diasporic life cycle can be
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104 Diasporans as Target Market-Service Innovation for Final Repatriation
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fully served. This offering is specifically targeted to diasporans who live their lives
in the region and many not have a strong belongingness towards the original
homeland. In particular, this legislation and offering provides an alternative funeral
and burial which enables the diasporic family to continue their traditions on site,
without travelling to the homeland based cemetery. Naturally, the idea is also to
provide cost-efficient way of keeping the traditions and institutions going on
locally without compromising religious norms. This is the first attempt in Germany
to overcome final repatriation to COO with a novel service customized for
diasporans while giving a new notion to Germany becoming the second homeland.
5. Findings
All of the cases illustrate the essential role of homeland, religion and its
requirements. Religious norms together with social norms and cultural traditions
create the basis for customer needs and preferences creating the need for final
repatriation. Final repatriation is part of diaspora life and it has been the key
problem to organize in the end of a diasporan’s life cycle. Final repatriation is
expensive, not easily plannable and it involves a high burden of bureaucracy and
organization. It is a service that requires professional suppliers either based in host
or home country or both. However, due to the belongingness and religious aspects
return to homeland has been a norm to follow for many diasporans and their
families. As time goes on and the families become more integrated also the
meaning of belongingness changes, as the case of Wuppertal illustrates.
The second case in Finland is well in line with the internationalization of
Finland and the emerging outbound foreign and diasporic market. In this case a
locally based traditional funeral agency identified a niche market via tourism for its
services and started offering this to foreigners and diasporans in Finland. Since the
number of foreigners in Finland in total is very low, there was no competition in
the sector as ethnic enclave business and insurance companies needed reliable
partners. In addition, the internationalization of businesses in the 90’s brought a
certain expatriate niche to the diasporic landscape when companies started to
attract foreign personnel. The interesting case here is the offering coming from a
Finnish service company towards other religions, which illustrates the logistics and
norm-compatible procedures of the service provider are more important than
belongingness into the same religious group as in ethnic enclave business.
The African case highlights the role of diaspora from the beginning being a
diaspora venture per se established to serve the foreigners in Tanzania. It offers of
repatriation services, both in and outbound of Tanzania. Corona caters to the needs
of foreigners in Tanzania in addition to Tanzanians requiring repatriation services
for a deceased family member. Notably, in keeping with Tanzanian traditions, the
firm also gives several opportunities for family/friends to contribute to the funeral
proceedings of a loved one through its webpage. This is of particular significance
due to the possible constraints faced by diasporans in returning home for a funeral.
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Maria Elo and Victor Mollel
__________________________________________________________________
The case of Wuppertal builds on re-conceptualizing itself as the second
‘homeland’ for the local diasporas and enabling the offering of novel services
locally, thus taking the final repatriation to a totally novel setting culturally,
religiously and socially.
Concerning diasporans as customers and service innovation developers the
cases provide material for following propositions:
Proposition 1. Diasporans are distinct from non-diasporan
customers and they are more receptive to targeted offerings due
to their diasporic ‘loadedness’, they are also more affine to codevelop such offerings.
Proposition 2. Diasporans are more receptive for services and
products that create value, even augmented value, related to
their cultural heritage and traditions, particularly due to
collectiveness.
Proposition 3. Diasporans are more receptive for service
innovations with novel culturally suitable value offerings, and
thus act more often as pioneers and early users.
6. Conclusions and Discussion
Service innovation in this diaspora context has indeed a collective character.
This extended customer- logic influences the service innovations from their stimuli
to their post-sales arrangements, and the role of diasporanness appears to be a
distinct feature and driver for the value creation. We believe that this limited study
may have instrumental characteristics and thus future research should pay more
attention to ‘diaspora customer’ as it seems to be a fruitful partner in creating new
target markets and services. Theoretically, the study advances the discussion on
diaspora as target customer and its roles in promoting novel niche market creation.
Managerially, the findings illustrate that on-line and international services may
create value in multiple ways and the collective character of diaspora services is a
source of business potential. The implications for policy making come from the
case of Wuppertal, providing new views to constituting a secondary homeland and
how to reduce institutional impediments restricting the life-cycle of successful
integration. The methodological implications denote the difficulties of definitions
and perspectives that are inherent in diaspora studies.33
Notes
1
Liesl Riddle and Jennifer Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’, International Business Review 20.6
(2011): 670-680.
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106 Diasporans as Target Market-Service Innovation for Final Repatriation
107
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2
e.g. Robin Cohen, Global Diasporas: An Introduction (Abingdon: Routledge,
2008); Jennifer M. Brinkerhoff, Digital Diasporas: Identity and Transnational
Engagement (Cambridge: Cambridge University Press. 2009); Riddle and
Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional Change Agents: The case of
Thamel.com’, 670-680.
3
cf. Rosalie L. Tung, ‘Brain Circulation, Diaspora, and International
Competitiveness’, European Management Journal 26.5 (2008): 298-304.
4
Nirmalya Kumar and Jan Benedict Steenkamp. ’Diaspora Marketing’. Harvard
Business Review 91.10 (2013): 127-150.
5
Riddle and Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional Change Agents:
The Case of Thamel.com’, 670-680.
6
Naftali Bendavid, ‘Europe's Empty Churches Go on Sale’, The Wall Street
Journal. Europe News, 2015, retrieved 15 May 2015,
http://www.wsj.com/articles/europes-empty-churches-go-on-sale-1420245359;
Rebekah Lee, ‘Death “On the Move”: Funerals, Entrepreneurs and the Rural-Urban
Nexus in South Africa’, Africa 81.02 (2011): 226-247; John S. Mbiti, African
Religions and Philosophy (Nairobi: East African Educational Publishers Ltd,
1969); Kazi Stastna, ‘Do Countries Lose Religion as They Gain Wealth? Poor
Nations Have the Highest Proportion of People Who Identify as Religious’, CBC
News, 2013, retrieved 10 May 2015 http://www.cbc.ca/news/world/do-countrieslose-religion-as-they-gain-wealth-1.1310451; Rijk A. Van Dijk, ‘Religion,
Reciprocity and Restructuring Family Responsibility in the Ghanaian Pentecostal
Diaspora’, The Transnational Family, New European Frontiers and Global
Networks, eds. Deborah Bryceson and Ulla Vuorela (Oxford: Berg, 2002), 173196, retrieved 10 May 2015, available at openaccess.leidenuniv.nl,
http://hdl.handle.net/1887/9601
7
Marleen de Witte, ‘Money and Death: Funeral Business in Asante, Ghana’.
Africa 73.04 (2003): 531-559; Beacon Mbiba, ‘Burial at Home? Dealing with
Death in the Diaspora and Harare’, Zimbabwe s New Diaspora: Displacement and
the Cultural Politics of Survival, eds. JoAnn McGregor and Ranka Primorac (New
York: Berghahn Books, 2010) 144-163; Lee, ‘Death “On the Move”: Funerals,
Entrepreneurs and the Rural–urban Nexus in South Africa’, 226-247.
8
see more statistics in United Nations Population Fund, retrieved 25 May 2015,
http://www.unfpa.org/migration
9
Miles, Ian. ‘Innovation in Services’. The Oxford Handbook of Innovation, eds.
Jan Fagerberg, David C. Mowery and Richard R. Nelson (New York: Oxford
University Press, 2005) 433-458
10
Jaakkola, Elina, Helkkula, A. and Aarikka-Stenroos, Leena. ‘Service Experience
Co-Creation: Conceptualization, Implications, and Future Research Directions’.
Journal of Service Management 26.2 (2015): 182-205.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Maria Elo and Victor Mollel
__________________________________________________________________
11
cf. Riddle and Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional Change
Agents: The Case of Thamel. com’, 670-680.
12
James C Spohrer, Stephen K. Kwan and Haluk Demirkan, ‘Service Science: on
Reflection’, New Business Models and Value Creation: A Service Science
Perspective, eds. Lino Cinquini, Alberto Di linin, Riccardo Varaldo (Rome:
Springer, 2013) 7-22
13
cf. Stephen L. Vargo and Robert F. Lusch, Vargo, ‘Service-Dominant Logic:
Continuing the Evolution’, Journal of the Academy of Marketing Science 36.1
(2008): 1-10.
14
Bendavid, Naftali. ‘Europe's Empty Churches Go on Sale’. The Wall Street
Journal. 2015, retrieved 15 May 2015, http://www.wsj.com/articles/europesempty-churches-go-on-sale-1420245359
15
Stastna, Kazi. ‘Do Countries Lose Religion as They Gain Wealth? Poor Nations
Have the Highest Proportion of People Who Identify as Religious’. CBC News,
2013, retrieved 10 May 2015, http://www.cbc.ca/news/world/do-countries-losereligion-as-they-gain-wealth-1.1310451
16
Paul, Gregory. ’The Chronic Dependence of Popular Religiosity upon
Dysfunctional Psychosociological Conditions’. Evolutionary Psychology 7.3
(2009): 398-441.
17
Gerdien Jonker, ‘The Knife’s Edge: Muslim Burial in the Diaspora’, Mortality
1.1 (1996): 27-43; Abdul R. Gatrad, ‘Muslim Customs Surrounding Death,
Bereavement, Postmortem Examinations, and Organ Transplants’, British Medical
Journal 309.6953 (1994): 521-523.
18
John S. Mbiti, African Religions and Philosophy (Nairobi: East African
Educational Publishers Ltd, 1969).
19
Connie Rapoo, ‘Just Give Us the Bones!: Theatres of African Diasporic
Returns’, Critical Arts 25.2 (2011): 132-149.
20
John S. Mbiti, African Religions and Philosophy (Nairobi: East African
Educational Publishers Ltd, 1969).
21
e.g., Jean-Maria Nkongolo-Bakenda and Elie V. Chrysostome, ‘Engaging
Diasporas as International Entrepreneurs in Developing Countries: In Search of
Determinants’, Journal of International Entrepreneurship 11.1 (2013): 30-64.
22
Suren G. Dutia, ‘Diaspora Networks: A New Impetus to Drive
Entrepreneurship’, Innovations 7.1 (2012): 65-72; Paul M. Vaaler, ‘Diaspora
Concentration and the Venture Investment Impact of Remittances’, Journal of
International Management 19.1 (2013): 26-46.
23
e.g. Jennifer M. Brinkerhoff, Digital Diasporas: Identity and Transnational
Engagement. (Cambridge: Cambridge University Press, 2009)
24
Kumar and Steenkamp, ‘Diaspora Marketing’, 127-150.
25
Kumar and Steenkamp, ‘Diaspora Marketing’, 127-150.
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108 Diasporans as Target Market-Service Innovation for Final Repatriation
109
__________________________________________________________________
26
Rogers Brubaker, ‘The “Diaspora” Diaspora’, Ethnic and Racial Studies 28.1
(2005): 1-19.
27
cf. Ulf Hannerz, ‘Borders’, International Social Science Journal 49.154 (1997):
537-548.
28
cf. Peggy Levitt, ‘Transnational Migration: Taking Stock and Future Directions’,
Global Networks 1.3 (2001): 195-216; Steven Vertovec, ‘Conceiving and
Researching Transnationalism’, Ethnic and racial studies 22.2 (1999): 447-462.,
Steven Vertovec,’Migrant Transnationalism and Modes of Transformation1’,
International migration review 38.3 (2004): 970-1001; Hannerz, ‘Borders’, 537548.
29
Khachig Tölölyan, ‘Rethinking Diaspora (s): Stateless Power in the
Transnational Moment’. Diaspora: a journal of transnational studies 5.1 (1996):
3-36.
30
Stake, Robert. The Art of Case Study Research. Thousand Oaks: Sage, 1995.
31
Piekkari, Rebekka and Welch, Catherine. (Eds.). Rethinking the Case Study in
International Business and Management Research. Cheltenham: Edward Elgar
Publishing, 2011.
32
Corona Funerals, retrieved 3 March 2015,
http://www.coronafunerals.com/international.html
33
cf. Brubaker, ‘The “Diaspora” Diaspora’, 1-19.
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Cohen, Robin. Global Diasporas: An Introduction. Abingdon: Routledge, 2008.
De Witte, Marleen. ‘Money and Death: Funeral Business in Asante, Ghana’. Africa
73.4 (2003): 531-559.
Dutia, Suren, G. ‘Diaspora Networks: A New Impetus to Drive Entrepreneurship’.
Innovations 7.1 (2012): 65-72.
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Maria Elo and Victor Mollel
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Gatrad, Abdul, R. ‘Muslim Customs Surrounding Death, Bereavement,
Postmortem Examinations, and Organ Transplants’. British Medical Journal
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Jaakkola, Elina, Anu Helkkula and Leena Aarikka-Stenroos ‘Service Experience
Co-Creation: Conceptualization, Implications, and Future Research Directions’.
Journal of Service Management 26.2 (2015): 182-205.
Jonker, Gerdien. ‘The Knife’s Edge: Muslim Burial in the Diaspora’. Mortality 1.1
(1996): 27-43.
Mbiba, Beacon. ’Burial at Home? Dealing with Death in the Diaspora and Harare’.
Zimbabwe s New Diaspora: Displacement and the Cultural Politics of Survival,
eds. JoAnn McGregor and Ranka Primorac, 144-163, New York: Berghahn Books,
2010.
Miles, Ian. ‘Innovation in Services’. The Oxford Handbook of Innovation, eds. Jan
Fagerberg, David C. Mowery and Richard R. Nelson, 433-458. New York: Oxford
University Press, 2005.
Kumar, Nirmalya and Jan-Benedict E. Steenkamp, ’Diaspora Marketing’. Harvard
Business Review 91.10 (2013): 127-150.
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International Entrepreneurs in Developing Countries: In Search of Determinants’.
Journal of International Entrepreneurship 11.1. (2013): 30-64.
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110 Diasporans as Target Market-Service Innovation for Final Repatriation
111
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Paul, Gregory. ’The Chronic Dependence of Popular Religiosity upon
Dysfunctional Psychosociological Conditions’. Evolutionary Psychology 7.3
(2009): 398-441.
Piekkari, Rebekka and Catherine Welch, eds. Rethinking the Case Study in
International Business and Management Research. Cheltenham: Edward Elgar
Publishing, 2011.
Rapoo, Connie. ‘Just Give us the Bones! : Theatres of African Diasporic Returns’.
Critical Arts 25.2 (2011): 132-149.
Riddle, Liesl and Jennifer Brinkerhoff, ‘Diaspora Entrepreneurs as Institutional
Change Agents: The Case of Thamel.com’. International Business Review 20.6
(2011): 670-680.
Stake, Robert. The Art of Case Study Research. Thousand Oaks: Sage, 1995.
Stastna, Kazi. ‘Do Countries Lose Religion as They Gain Wealth? Poor Nations
Have the Highest Proportion of People Who Identify as Religious’. CBC News,
2013, retrieved 10 May 2015, http://www.cbc.ca/news/world/do-countries-losereligion-as-they-gain-wealth-1.1310451
Tung, Rosalie. L. ‘Brain Circulation, Diaspora, and International Competitiveness’.
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Moment’. Diaspora: a Journal of Transnational Studies 5.1 (1996): 3-36.
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Remittances’. Journal of International Management 19.1 (2013): 26-46.
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in the Ghanaian Pentecostal Diaspora’, The Transnational Family, New European
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Maria Elo and Victor Mollel
__________________________________________________________________
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Maria Elo holds a PhD in Economics, Åbo Akademi University, Finland. She is a
post-doctoral researcher at Turku School of Economics, Finland and a Migration
Fellow at the Institute of Migration. She is the founder and leader of the Diaspora
Networks in International Business- research platform. Her research focuses on
international business and diaspora. Her work is published in books and journals,
such as Industrial Marketing Management.
Victor Mollel is a Tanzanian expert of culturally-diverse environments. He holds a
Master of Science (M.s.c) in Business Administration and Economics from the
University of Lappeenranta of Finland, with majors in Strategy, Innovation and
Sustainability.
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112 Diasporans as Target Market-Service Innovation for Final Repatriation
Steven Lucas
Abstract
This chapter will argue for the development of a network based framework for
understanding the formation and success of migrant businesses, based on research
in the Republic of Ireland and Northern Ireland. Mixed embeddedness is currently
a prevailing theory, which emphasises the legal, political and economic structures
which impact migrant businesses in host states. This has been followed by the
biographical embeddedness approach, which is more focused on the individual
agency of the migrant entrepreneurs. There is a tension between these approaches
based on the importance of structures or migrant agency for understanding migrant
business. However, based on findings from the empirical research, this chapter will
argue for an approach based on the social capital of migrants. Most of the
participants stated that an initial lack of contacts was the key challenge facing their
business. Deprived of the established networks that many non-migrant business
owners possess, migrant businesses in Ireland have struggled. The findings
presented will be based on interviews with 41 self-employed migrants from both
states. The island of Ireland is particularly fascinating as a case study given the
relatively low proportion of migrants which are self-employed. This is even more
surprising given the high proportion of non-migrant self-employment. In many
countries the reverse is the case. Therefore, it is relevant as a site to analyse the
challenges faced by business, but which evidently are the most keenly felt by
migrants.
Key Words: Migrant entrepreneurship, mixed embeddedness, biographical
embeddedness, social capital.
*****
1. Introduction
Job creation is a priority of governments in the Republic of Ireland and
Northern Ireland in order to re-establish economic growth and recovery. Small and
medium sized enterprises (SMEs) contribute 80 per cent of employment in
Northern Ireland1 and 52 per cent of total employment in the Republic.2 SMEs are
therefore crucial in the bid to increase job creation, and intensive efforts are being
made to support them, for example with the creation of Microfinance Ireland in the
Republic. This SME support is not restricted to the island of Ireland. However, in
many other states, migrants play a key role, often being statistically more likely to
become self-employed than the non-migrant population.3 Nonetheless, the opposite
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Analysing the Low Rate of Self-Employment among Migrants in
the Republic of Ireland and Northern Ireland: The Social
Capital of Self-Employed Migrants
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
appears to be the case in Ireland, which performs poorly compared to most other
OECD nations (see Figure 1).4 A key element of the strategy to promote job
creation through SMEs should therefore focus on encouraging more migrants to
become self-employed. Firstly, however, it needs to be clear why the rate of selfemployment among migrants is low. Given that self-employment among nonmigrants is high, the argument that Ireland is not ‘entrepreneurial’ may be
inadequate (see Figure 2).5 Therefore, in-depth interviews were conducted with 41
self-employed migrants, in order to ascertain the challenges they face in becoming
and staying self-employed in the Republic of Ireland and Northern Ireland.
Drawing on the Central Statistics Office (CSO), the research definition of
migrant is someone who has been abroad for a year continuously before returning
or coming to Ireland.6 This has two
important
implications.
Firstly,
migrants of similar ethnicity to the
Irish have been included in the
sample. It was argued that migrants
from Western Europe, North
America, Australia and New Zealand
were culturally too similar to the
Irish, and therefore their experiences
of enterprise would not be
significantly different.7 However,
there is evidence to refute this.8
Furthermore, if these migrants are
included in the sample, it may be
possible
to
compare
their
Figure 1: % of foreign-born population
experiences with those of ethnicities
which were self-employed 2009 - 2011.
different to the Irish. This may
© 2015 Steven Lucas drawing on data
provide evidence to support whether
from
the Organisation for Economic Cothey should be included in research
operation
and Development (OECD) and
samples or not.
the
Northern
Ireland Statistics and
The second important implication
Research Agency (NISRA).
is the inclusion of returned Irish
migrants in the sample. In the
literature on migrant self-employment, the importance of the experience of
migration is often highlighted. For example, in a policy document from the
Republic of Ireland in 2007, Forfás claim that:
It is generally considered that immigrants tend to be more
entrepreneurial compared to those who are living in the country
of their birth, because of their personal traits of self-
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determination and risk-taking, which have been evidenced by
their decision to leave the country of their birth in the first place.9
A recent paper by Hormiga and Bolívar-Cruz10 provides some empirical evidence
of this. Therefore, given that this can be applied to return migrants as well as those
which are foreign-born, the former should be included in the sample. Furthermore,
Ireland has experienced high levels of return migration,11 and the role of this cohort
in economic recovery needs to be examined further.
2. Understanding Migrant Self-Employment: Embeddedness and Social
Capital Frameworks
Mixed embeddedness emphasises the importance of the social, political and
economic structures which frame business activity in order to understand migrant
entrepreneurship.12 This focus on structure
is often manifested in work which focuses
on topics such as: the existence of large coethnic populations,13 access to finance,14
the availability of business support,15 and
the provision of adequate office space.16
Mixed embeddedness also argues that
migrants are enmeshed within broader
institutional frameworks such as postfordism and neoliberalism.17 The problem
with this concept is that it often emphasises
the role of the structures, and overlooks the
agency of the migrant entrepreneurs.18
Nonetheless, this concept does have some
value for understanding the data gathered
as part of this research. Migrant selfFigure 2: % of native-born
employment cannot be viewed apart from
population which were selfthe current social, political and economic
employed 2009 - 2011.
climate in post-recession Ireland. There is
© 2015 Steven Lucas drawing on
an emphasis on small and medium sized
data from the OECD and NISRA
business creation in order to provide
employment after the economic crash of
2008.19 Many of the research participants are a part of this new trend. However,
during the interviews, very few mentioned any trouble with the business
environment in Ireland. If anything, some argued that starting a business in Ireland
compared favourably with their country of birth. Important variables associated
with a mixed embeddedness approach were also often overlooked. Therefore,
issues like access to finance, the provision of training, tax burdens, and sectoral
barriers were frequently of little concern for many of the participants.
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Steven Lucas
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
Biographical embeddedness focuses on the experiential resources of migrant
entrepreneurs, to understand migrant business start-up, survival and success.20
Kontos21 argues that the various forms of capital are often irrelevant to understand
female and migrant enterprise, as their businesses sometimes exist without such
capital. Ethnic resources can be used to remedy this in the case of migrants, but
these may not apply to female entrepreneurs. Kontos argues that the concept of
biographical embeddedness solves this problem by highlighting experiential
resources.22 This concept therefore shifts the focus onto the migrants’ experiences
and the intangible motivational resources they draw upon, which are often
overlooked. This is crucial as it mediates the impact that structural variables have
on the outcomes of each self-employed migrant. Nonetheless, while motivational
resources are important, the development of social capital seemed more influential
on the outcomes of different participants in the research sample.
Therefore, the importance of this latter concept will be highlighted. Portes and
Landolt define ‘social capital as the ability to secure resources by virtue of
membership in social networks or larger social structures’.23 As the authors note,
social capital is thus generally regarded as positive. However, Kontos argues that
the resources provided by the migrant community to the business owner may not
be enough to understand migrant self-employment.24 Drawing on the migrant
entrepreneurship literature, she highlights that migrants often go outside ethnic
networks while doing business. With regard to the data collected, this does appear
to be the case. However, the role of networks which extend beyond the migrant
community needs to be further developed. As the next section will show,
establishing themselves within their communities was one of the main challenges
for the participants. One of the problems with social capital is that the development
of strong networks of agents who are ‘insiders’, by necessity also creates
outsiders.25 This is evident in the data gathered through the interviews for this
research. In the next section, the exclusion the foreign-born participants have often
experienced will be focused upon. Attention will then shift to the return migrants in
the sample, to see if their ‘Irishness’ or ‘Britishness’ is enough to grant them
access to these networks; the chapter will conclude by highlighting the strategies
deployed by migrants to deal with this obstacle.
3. Local Networks and Migrant Self-Employment: The Findings of the
Research
Early during the process of gathering the data, a participant from the United
States (US)26 articulated his experience of being self-employed in Ireland, claiming
that the town you are from is influential. His experiences are reminiscent of those
of other participants, and he will be returned to towards the end of the paper.
Another participant from the United Kingdom (UK), living in a rural town, was in
the process of becoming self-employed when she was interviewed early in 2015.
She described her efforts to engage with the local community, but felt that there
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was resistance from locals to outsiders. Similar to the aforementioned migrant from
the US, she highlighted that this exclusion was explained by her outsider status,
rather than being drawn along race or ethnicity lines. She then elaborated on the
business that she was starting. This involved reaching out to people in the local
community for support, but again they were unhelpful. However, while engaging
with the business community in a nearby city, she found that the level of support
was completely different. Business leaders offered feedback on the product, and
some retailers offered to sell it.
A further participant echoed similar sentiments. He is experienced in the design
of medical products, and planned to create them for large customers. In the case of
one such product, he claimed that it would last longer and was cheaper than its
competitors on the market. However, because of his lack of networks he struggled
to attract the right volume of customers. He argues that this is because he did not
attend school or college in Ireland, and is not a member of sports or other social
associations. These are the types of places where he thought the right connections
could be made. However, when he got in contact with friends from the medical
college he attended, he had no such problems selling his product. He has since
closed the operation in Ireland. His brother now operates the business for him in
the country of origin. These experiences tend to reflect fairly accurately the trends
among the rest of the foreign-born migrants in the sample.
As data collection from return migrants began, contrasting experiences were
expected from people who were born and lived in Ireland. Surprisingly, some of
the experiences reflected those of foreign-born migrants. One returned migrant,
who was not part of the sample, offered his perspective via an online
correspondence. He experienced difficulty in reinserting himself into old networks
once he had returned from abroad. Many of the other return migrants in the sample
echoed these sentiments. In almost all cases the importance of networks for
attracting customers was highlighted. One participant was formerly self-employed
offering financial advice. He studied in the UK before working elsewhere in
Europe. However, after becoming self-employed in Northern Ireland he struggled
to develop the right volume of demand. He was able to use his mother’s networks
to find older customers, particularly those looking for advice on pensions.
Nevertheless, developing a customer base beyond this was a struggle. He noted
that most of his friends had studied abroad, and that it was the people who stayed
and studied in Ireland who developed the most vibrant and professionally-useful
networks.
Another participant spoke about a more unusual use of social capital. Upon
returning from abroad, she also used her mother’s networks to attract customers.
However, paralleling the experience of the participant from the UK referred to at
the beginning of this section, she noted the difficulty of establishing herself in a
closed-off town. In order to circumvent this she started using her birth name again,
as her family was known in that area. In this way, she was able to break into this
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Steven Lucas
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
market. A further participant worked abroad as an aid worker for a number of
years. While old friendships existed to a degree when she returned, they were very
difficult to rekindle. The reason for this is that she believes that her time abroad
politicized her, leading her to make new friends. Developing a customer base was
slow and difficult, although she now has a reputation and demand has picked up to
the extent that she has had to hire staff. What could have contributed to this initial
slow pace was her proximity to Ireland while away. The aid work took her far
afield and she rarely returned to Ireland while living abroad.
For another participant however, the opposite was the case and he experienced
a smoother re-integration into old networks. He left Ireland to study in the UK.
After finishing college he began his own business there, which he ran for a number
of years. However, he decided that if he did not return to Ireland soon, he would
not return at all. Therefore, he came back and established a business. Reintegrating into old networks was not problematic, as the close proximity to Ireland
meant that he could return regularly and maintain relationships. Compared to the
former aid worker, this has made re-establishing the business in Ireland easier.
Nevertheless, for another two participants, despite living sizable distances from
Ireland, the nature of their work has helped them to maintain important networks or
circumvent the need for them upon return.
One participant returned after working for a number of years in the MiddleEast. Upon returning to Ireland, he decided to undertake a masters and wanted to
make money while studying. He therefore became self-employed, and worked
from home. While abroad he developed a list of contacts and used these as a
customer base, except this time in a self-employed capacity. This helped him, as he
did not have to develop a local customer base. The other participant makes
websites. When he was young he did some work for a local club and established a
reputation locally as a computer ‘whizz’. While living in New Zealand he still
received emails from home asking him to do jobs. Upon returning there was a
customer base waiting for him, despite being away for a long time and not making
trips home. The nature of his job in New Zealand also meant that he could do the
work that he was previously employed for on a contract basis from home.
These examples are largely representative of the findings from the rest of the
sample. This indicates that social capital is important to understand the low rate of
migrant self-employment in the Republic of Ireland and Northern Ireland.
However, despite the difficulties breaking into existing networks, it can be done
and migrants in the sample have taken measures to this effect. With regard to the
participant who returned to Ireland from the UK, she started using her birth name
because her family was known in the area in which she wanted to do business.
There is also the migrant from the UK who had trouble breaking into the dense
networks in a different rural town. By persisting, to the point of engaging business
leaders and potential retailers for her product in a nearby city, she was able to
obtain feedback and customers for her product. Another foreign-born migrant, not
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yet mentioned, joined his business with that of an Irish person. They now co-own
their merged businesses, and the migrant has made use of his partner’s long list of
contacts and knowledge of the Irish business market. The participant from the US,
cited at the beginning of this section, will also draw it to a close. He highlighted
that business owners themselves need to take the initiative in developing networks,
claiming that people are less likely to help unless you engage with them first. He
also illustrated that he is an enthusiastic networker. Despite returning to paid
employment, he still attends international conferences and aims to talk to people
who are at the ‘top-table’. Despite this, the inroads he made were limited and he
has ceased self-employment, not certain if he will return to it in the future.
Therefore, while it is possible for migrants to establish themselves in the networks
which can provide them with the support and demand they need, these efforts are
not always successful.
Notes
1
GradIreland, Jobs with Smaller Companies (2015), viewed 14 May 2015,
http://gradireland.com/careers-advice/choosing-your-employer/jobs-with-smallercompanies.
2
Irish Small and Medium Enterprises Association, SME Facts & FAQ (2015),
viewed 14 May 2015, http://isme.ie/advice/sme-facts-faq.
3
Organisation for Economic Cooperation and Development, Entrepreneurship at a
Glance 2013 (2013a), viewed 1 August 2014,
http://dx.doi.org/10.1787/entrepreneur_aag-2013-en.
4
Organisation for Economic Co-operation and Development (OECD),
Entrepreneurship at a Glance 2013, 2013b, viewed 6 August 2015,
http://dx.doi.org/10.1787/888932829229; Northern Ireland Statistics and Research
Agency (NISRA), Table DC2606NI: Economic Activity by Country of Birth by Age
by Sex, 2013, viewed 6 August 2015,
https://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC
EQFjAAahUKEwiUhrvvw5THAhXCCNsKHaDiCjo&url=http%3A%2F%2Fww
w.ninis2.nisra.gov.uk%2FDownload%2FCensus%25202011_Excel%2F2011%2F
DC2606NI.xls&ei=vlzDVZSvMsKR7AagxavQAw&usg=AFQjCNF0VvmKNPn9
FCwM6zI90rBbG1r71w.
5
Organisation for Economic Co-operation and Development (OECD),
Entrepreneurship at a Glance 2013, 2013b; Northern Ireland Statistics and
Research Agency (NISRA), Table DC2606NI.
6
Central Statistics Office, Profile 6: Migrations and Diversity (2012), viewed 10
March 2014,
http://www.cso.ie/en/media/csoie/census/documents/census2011profile6/Profile,6,
Migration,and,Diversity,entire,doc.pdf.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Steven Lucas
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
7
Thomas Cooney and Anthony Flynn, A Mapping of Ethnic Entrepreneurship in
Ireland (Dublin: Dublin Institute of Technology, 2008), viewed 20 November
2013, http://arrow.dit.ie/cgi/viewcontent.cgi?article=1000&context=imerep.
8
Mary Gilmartin and Bettina Migge, ‘Working through a Recession’,
Translocations: Migration and Social Change 7.1 (2011): 0-13, viewed 14 March
2014, http://eprints.nuim.ie/3548/1/MG_Working_Recession.pdf; Mary Gilmartin,
‘British Migrants and Irish Anxieties’, Social Identities, 19.5 (2013): 637-652,
viewed 14 March 2014,
http://www.tandfonline.com/doi/pdf/10.1080/13504630.2013.835513.
9
Forfás, Towards Developing an Entrepreneurial Policy for Ireland, 2007, viewed
2 December 2013, 73,
http://www.forfas.ie/media/forfas071023_entrepreneurship_policy.pdf.
10
Esther Hormiga and Alicia Bolívar-Cruz, ‘Relationship Between the Migration
Experience and Risk Perception: A Factor in the Decision to Become an
Entrepreneur’, International Entrepreneurship and Management Journal, 10.2
(2014): 297-317, viewed 27 May 2015,
http://link.springer.com/article/10.1007/s11365-012-0220-9.
11
Central Statistics Office, Profile 6: Migrations and Diversity.
12
Robert Kloosterman, Joanne Van Der Leun and Jan Rath, ‘Mixed
Embeddedness: (In)formal Economic Activities and Immigrant Businesses in the
Netherlands’, Journal of Ethnic and Migration Studies 23.2 (1999): 252-266,
viewed 12 March 2014, http://onlinelibrary.wiley.com/doi/10.1111/14682427.00194/pdf; Robert Kloosterman and Jan Rath, ‘Immigrant Entrepreneurs in
Advanced Economies: Mixed Embeddedness Further Explored’, Journal of Ethnic
and Migration Studies 27.2 (2001): 189-201, viewed 12 March 2014,
http://www.tandfonline.com/doi/pdf/10.1080/13691830020041561.
13
Mariah Evans, ‘Immigrant Entrepreneurship: Effects of Ethnic Market Size and
Isolated Labor Pool’, American Sociological Review 54.6 (1989): 950-962, viewed
16 September 2014,
http://www.jstor.org/stable/pdfplus/2095717.pdf?&acceptTC=true&jpdConfirm=tr
ue; Marie Mora and Alberto Dávila, ‘Ethnic Group Size, Linguistic Isolation, and
Immigrant Entrepreneurship in the USA’, Entrepreneurship & Regional
Development: An International Journal 17.5 (2005): 389-404, viewed 29 October
2014), http://www.tandfonline.com/doi/pdf/10.1080/08985620500275612.
14
Cooney and Flynn, A Mapping of Ethnic Entrepreneurship in Ireland.
15
Hadewijch van Delft, Cees Gorter and Peter Nijkamp, ‘In Search of Ethnic
Entrepreneurship Opportunities in the City: A Comparative Policy Study’,
Environment and Planning C: Government and Policy 18.4 (2000): 429-451,
viewed 25 November 2013, http://www.envplan.com/fulltext_temp/0/c9873.pdf;
Monder Ram and David Smallbone, Ethnic Minority Enterprise: Policy in Practice
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120
121
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(London: Middlesex University Small Business Service, 2001), viewed 25
November 2013,
https://eprints.mdx.ac.uk/3820/1/Ethnic_Minority_Enterprise_Policy_in_Practice.p
df.
16
Pascal Beckers and Robert Kloosterman, ‘Open to Business? An Exploration of
the Impact of the Built Environment and Zoning Plans on Local Businesses in Prewar and Post-war Residential Neighbourhoods in Dutch Cities’, Urban Studies
51.1 (2014): 153-169, viewed 3 March 2014,
http://usj.sagepub.com/content/51/1/153.full.pdf+html.
17
Robert Kloosterman, ‘Creating Opportunities. Policies Aimed at Increasing
Openings for Immigrant Entrepreneurs in the Netherlands’, Entrepreneurship and
Regional Development: An International Journal 15.2 (2003): 167-181, viewed 25
November 2013,
http://www.tandfonline.com/doi/pdf/10.1080/0898562032000075159.
18
Caroline Brettell and Kristoffer Alstatt, ‘The Agency of Immigrant
Entrepreneurs: Biographies of the Self-Employed in Ethnic and Occupational
Niches of the Urban Labor Market’, Journal of Anthropological Research 63.3
(2007): 383-397, viewed 30 January 2014
http://www.jstor.org/stable/pdfplus/20479430.pdf; For an exception see Robert
Kloosterman, ‘Matching Opportunities with Resources: A Framework for
Analysing (Migrant) Entrepreneurship from a Mixed Embeddedness Perspective’,
Entrepreneurship & Regional Development 22.1 (2010): 25-45, viewed 12 March
2014, http://www.tandfonline.com/doi/pdf/10.1080/08985620903220488.
19
Kate Kenny and Stacey Scriver, ‘Dangerously Empty? Hegemony and the
Construction of the Irish Entrepreneur’, Organization 19.5 (2012): 615-633,
viewed 7 March 2014, http://org.sagepub.com/content/19/5/615.full.pdf+html.
20
Ursula Apitzsch, ‘Gaining Autonomy in Self-Employment Processes: The
Biographical Embeddedness of Women’s and Migrants’ Business’, International
Review of Sociology 13.1 (2003): 163-182, viewed 20 March 2014,
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000087041.
21
Maria Kontos, ‘Considering the Concept of Entrepreneurial Resources in Ethnic
Business: Motivation as a Biographical Resource?’, International Review of
Sociology 13.1 (2003): 183-204, viewed 20 March 2014,
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000087050.
22
Ursula Apitzsch and Maria Kontos, ‘Self-Employment, Gender and Migration’,
International Review of Sociology 13.1 (2003): 67-76, viewed 20 March 2014,
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000086989.
23
Alejandro Portes and Patricia Landolt, ‘Social Capital: Promise and Pitfalls of Its
Role in Development’, Journal of Latin American Studies 32.2 (2000): 529-547,
viewed 15 May 2015,
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Steven Lucas
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=15969
&fileId=S0022216X00005836.
24
Kontos, ‘Considering the Concept of Entrepreneurial Resources in Ethnic
Business: Motivation as a Biographical Resource?’, 183-204.
25
Portes and Landolt, ‘Social Capital: Promise and Pitfalls of Its Role in
Development’, 529-547; Alejandro Portes, ‘Downsides of Social Capital’,
Proceedings of the National Academy of Sciences of the United States of America
(PNAS) 111.52 (2014): 18407-18408, viewed 14 May 2015,
http://www.pnas.org/content/111/52/18407.full.pdf.
26
In the interest of anonymity, some of the details of participants have been
removed.
Bibliography
Apitzsch, Ursula and Maria Kontos. ‘Self-Employment, Gender and Migration’.
International Review of Sociology 13.1 (2003): 67-76. Viewed 20 March 2014.
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000086989.
Apitzsch, Ursula. ‘Gaining Autonomy in Self-Employment Processes: The
Biographical Embeddedness of Women’s and Migrants’ Business’. International
Review of Sociology 13.1 (2003): 163-182. Viewed 20 March 2014.
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000087041.
Beckers, Pascal and Robert Kloosterman. ‘Open to Business? An Exploration of
the Impact of the Built Environment and Zoning Plans on Local Businesses in Prewar and Post-war Residential Neighbourhoods in Dutch Cities’. Urban Studies
51.1 (2014): 153-169. Viewed 3 March 2014.
http://usj.sagepub.com/content/51/1/153.full.pdf+html.
Brettell, Caroline and Kristoffer Alstatt. ‘The Agency of Immigrant Entrepreneurs:
Biographies of the Self-Employed in Ethnic and Occupational Niches of the Urban
Labor Market’. Journal of Anthropological Research 63.3 (2007): 383-397.
Viewed 30 January 2014. http://www.jstor.org/stable/pdfplus/20479430.pdf.
Central Statistics Office. Profile 6: Migrations and Diversity (2012). Viewed 10
March 2014.
http://www.cso.ie/en/media/csoie/census/documents/census2011profile6/Profile,6,
Migration,and,Diversity,entire,doc.pdf.
Cooney, Thomas and Anthony Flynn. A Mapping of Ethnic Entrepreneurship In
Ireland. Dublin: Dublin Institute of Technology, 2008. Viewed 20 November
2013. http://arrow.dit.ie/cgi/viewcontent.cgi?article=1000&context=imerep.
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Evans, Mariah. ‘Immigrant Entrepreneurship: Effects of Ethnic Market Size and
Isolated Labor Pool’. American Sociological Review 54.6 (1989): 950-962. Viewed
16 September 2014.
http://www.jstor.org/stable/pdfplus/2095717.pdf?&acceptTC=true&jpdConfirm=tr
ue.
Forfás. Towards Developing an Entrepreneurial Policy for Ireland, 2007. Viewed
2 December 2013, 73.
http://www.forfas.ie/media/forfas071023_entrepreneurship_policy.pdf.
Gilmartin, Mary and Bettina Migge. ‘Working through a Recession’.
Translocations: Migration and Social Change 7.1 (2011): 0-13. Viewed 14 March
2014. http://eprints.nuim.ie/3548/1/MG_Working_Recession.pdf.
Gilmartin, Mary. ‘British Migrants and Irish Anxieties’. Social Identities 19.5
(2013): 637-652. Viewed 14 March 2014.
http://www.tandfonline.com/doi/pdf/10.1080/13504630.2013.835513.
GradIreland. Jobs with Smaller Companies (2015). Viewed 14 May 2015.
http://gradireland.com/careers-advice/choosing-your-employer/jobs-with-smallercompanies.
Hormiga, Esther and Alicia Bolívar-Cruz. ‘Relationship between the Migration
Experience and Risk Perception: A Factor in the Decision to Become an
Entrepreneur’. International Entrepreneurship and Management Journal 10.2
(2014): 297-317. Viewed 27 May 2015.
http://link.springer.com/article/10.1007/s11365-012-0220-9.
Irish Small and Medium Enterprises Association. SME FACTS & FAQ (2015).
Viewed 14 May 2015. http://isme.ie/advice/sme-facts-faq.
Kenny, Kate and Stacey Scriver. ‘Dangerously Empty? Hegemony and the
Construction of the Irish Entrepreneur’. Organization 19.5 (2012): 615-633.
Viewed 7 March 2014. http://org.sagepub.com/content/19/5/615.full.pdf+html.
Kloosterman, Robert and Jan Rath. ‘Immigrant Entrepreneurs in Advanced
Economies: Mixed Embeddedness Further Explored’. Journal of Ethnic and
Migration Studies 27.2 (2001): 189-201. Viewed 12 March 2014.
http://www.tandfonline.com/doi/pdf/10.1080/13691830020041561.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Steven Lucas
Analysing the Low Rate of Self-Employment among Migrants
__________________________________________________________________
Kloosterman, Robert. ‘Creating Opportunities. Policies Aimed at Increasing
Openings for Immigrant Entrepreneurs In the Netherlands’. Entrepreneurship and
Regional Development: An International Journal 15.2 (2003): 167-181. Viewed 25
November 2013.
http://www.tandfonline.com/doi/pdf/10.1080/0898562032000075159.
Kloosterman, Robert, Joanne Van Der Leun and Jan Rath. ‘Mixed Embeddedness:
(In)formal Economic Activities and Immigrant Businesses in the Netherlands’.
Journal of Ethnic and Migration Studies 23.2 (1999): 252-266. Viewed 12 March
2014. http://onlinelibrary.wiley.com/doi/10.1111/1468-2427.00194/pdf.
Kloosterman, Robert. ‘Matching Opportunities with Resources: A Framework for
Analysing (Migrant) Entrepreneurship From a Mixed Embeddedness Perspective’.
Entrepreneurship & Regional Development 22.1 (2010): 25-45. Viewed 12 March
2014. http://www.tandfonline.com/doi/pdf/10.1080/08985620903220488.
Kontos, Maria. ‘Considering the Concept of Entrepreneurial Resources in Ethnic
Business: Motivation as a Biographical Resource?’. International Review of
Sociology 13.1 (2003): 183-204. Viewed 20 March 2014.
http://www.tandfonline.com/doi/pdf/10.1080/0390670032000087050.
Mora, Marie and Alberto Dávila. ‘Ethnic Group Size, Linguistic Isolation, and
Immigrant Entrepreneurship in the USA’. Entrepreneurship & Regional
Development: An International Journal 17.5 (2005): 389-404. Viewed 29 October
2014). http://www.tandfonline.com/doi/pdf/10.1080/08985620500275612.
Northern Ireland Statistics and Research Agency (NISRA). Table DC2606NI:
ECONOMIC ACTIVITY BY COUNTRY OF BIRTH BY AGE BY SEX, 2013.
Viewed 6 August 2015.
https://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC
EQFjAAahUKEwiUhrvvw5THAhXCCNsKHaDiCjo&url=http%3A%2F%2Fww
w.ninis2.nisra.gov.uk%2FDownload%2FCensus%25202011_Excel%2F2011%2F
DC2606NI.xls&ei=vlzDVZSvMsKR7AagxavQAw&usg=AFQjCNF0VvmKNPn9
FCwM6zI90rBbG1r71w.
Organisation for Economic Cooperation and Development. Entrepreneurship at a
Glance 2013 (2013a). Viewed 1 August 2014.
http://dx.doi.org/10.1787/entrepreneur_aag-2013-en.
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124
125
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Portes, Alejandro. ‘Downsides of Social Capital’. Proceedings of the National
Academy of Sciences of the United States of America (PNAS) 111.52 (2014):
18407-18408. Viewed 14 May 2015.
http://www.pnas.org/content/111/52/18407.full.pdf.
Portes, Alejandro and Patricia Landolt. ‘Social Capital: Promise and Pitfalls of Its
Role in Development’. Journal of Latin American Studies 32.2 (2000): 529-547.
Viewed 15 May 2015.
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=15969
&fileId=S0022216X00005836.
Ram, Monder and David Smallbone. Ethnic Minority Enterprise: Policy in
Practice. London: Middlesex University Small Business Service, 2001. Viewed 25
November 2013.
https://eprints.mdx.ac.uk/3820/1/Ethnic_Minority_Enterprise_Policy_in_Practice.p
df.
van Delft, Hadewijch, Cees Gorter and Peter Nijkamp. ‘In Search of Ethnic
Entrepreneurship Opportunities in the City: A Comparative Policy Study’.
Environment and Planning C: Government and Policy 18.4 (2000): 429-451.
Viewed 25 November 2013. http://www.envplan.com/fulltext_temp/0/c9873.pdf.
Steven Lucas is a PhD candidate at the Department of Geography in Maynooth
University, Ireland. His research focuses on analyzing the causes of the low rate of
migrant self-employment in the Republic of Ireland and Northern Ireland. He can
be reached at steven.lucas@nuim.ie.
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Steven Lucas
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Diaspora Frameworks, Institutions and Policy-Making
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Part IV
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Abstract
With economic development depending heavily on accumulation and diffusion of
knowledge, highly skilled and well networked entrepreneurial individuals have
become crucial for an economy. These carriers of knowledge are increasingly
mobile and dispersed, however, which means that countries of origin (COOs) need
to develop proper strategies and policies to turn brain drain into knowledge gain.
Applying emigrant human capital to a COO’s economic development is a difficult
task, as it demands comprehensive understanding of both the mechanisms and
success factors behind emigrant engagement and knowledge sharing with the
COO. To deepen this knowledge we conduct a cross-country comparative case
study covering migration policies and diaspora strategies of four small COOs:
Austria, Estonia, Ireland and Slovenia. Our key research question is: How can
(small) COOs enhance the application of emigrant human capital to their economic
development? We develop a tool for assessing COO approaches to emigrant
engagement as well as provide a systematic overview of the existing COO
approaches to their emigrant communities abroad, specific COO techniques
implemented for transforming brain drain into knowledge gain and barriers
hindering emigrant engagement and knowledge sharing with the COO. The latter
include: indistinct allocation of responsibility, lack of reliable migration data,
negative perceptions of emigrants, underdeveloped institutional capacity, policy
fragmentation and coordination issues. Moreover, we discover that a COO’s
approach to emigrant communities is contingent on perception and recognition of
emigrant community’s value by both the COO’s government and inhabitants, while
its success depends on communication clarity, consistency and inclusiveness. We
also note that network structure and content (especially in terms of network
heterogeneity and strength of ties) strongly influence effectiveness and efficiency
of knowledge sharing in the context of international migration. Such impact is
found in both the (interconnected) emigrant and institutional networks.
Key Words: Migration, migration policy, diaspora strategies, emigrant human
capital, knowledge sharing, brain drain, knowledge gain, public-private
cooperation, networking.
*****
1. Introduction
National institutional structures, government policies and development
strategies influence economic performance and competitiveness of a country's
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Gains from Diaspora’s Brain:
The Complexity of Successful Migration Policy
Gains from Diaspora’s Brain
__________________________________________________________________
firms, inhabitants and emigrant communities, thereby impacting a country’s
economic performance and competitiveness.1 While standard economic theory
defined comparative advantage by labour, land, natural resources, capital and
infrastructure, new models emphasise created resources, process technology,
educated and skilled labour, knowledge and information, creativity and
connectivity (i.e. networks).2 The latter – through multiplying opportunities for
dialogue and exchange – provide a tool for generation, advancement and
circulation of knowledge.3
Still, one ‘/…/ cannot expect to derive any value from social ties to actors who
lack the ability to help /…/’.4 For networking to generate wanted results the
process needs to be strategic: finding a right balance between strategic
relationships with stakeholders whose resources, skills and capabilities enable an
entity such as a country to create superior value and operative or tactic
relationships with stakeholders whose resources are easily substituted is crucial.5
With economic development depending heavily on accumulation and diffusion of
knowledge,6 it is the highly skilled and well networked entrepreneurial individuals
who are vital for an economy.7 These individuals have become progressively
mobile and consequently (globally) dispersed.8 They present a growing component
of global migration flows and record the highest
emigration rates for most countries of origin (COOs).9
An empirical study on international migration from Albania shows that the
likelihood of permanent migration steadily increases with education level of
(potential) emigrants.10 Not only are the highly qualified and educated more
willing to migrate, they are also more capable to finance their move and (for a
large part) more compatible with the international labour market.11 Despite
emigration of these individuals or groups often being perceived as brain drain by
their COOs, maintenance of a strategic dialectic intertwining of old and new
locations can lead to knowledge generation12 as well as knowledge sharing.13 It is
hence to be expected that international competitiveness and mobility of experts
will enhance human capital and boost economic performance through greater
productivity, creativity and efficiency of the innovation process.14
2. Objectives and Methodology
Governments (with their strategies and policies) can play an important role in
enhancing emigrants’ engagement with the COO: (governmental) institutions can
perform an especially vital role as relationship promoters and initiators due to their
embeddedness in both domestic and international networks.15 Applying emigrant
human capital to a COO’s economic development is a difficult task, however –
especially since little is known about which policies, strategies and institutions
promoting emigrant engagement are effective.
While the role of (internationally dispersed) knowledge and knowledge
exchange has recently emerged as an important area of study of innovation and
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130
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value creation in a firm,16 international dispersion and transfer of knowledge has
been highly neglected in political debates – specifically in relation to knowledge
sharing between migrant communities and their homeland.17 To strengthen the
understanding of the latter we focus on migration policies18 and diaspora
strategies19 stressing knowledge sharing between emigrants and their COOs
through establishing, maintaining, developing and managing emigrants’ (greater)
connectedness and engagement with a COO. Emigrant human capital is
particularly relevant for small countries facing resource scarcity, which – without
proper strategies and policies – can become an even profounder problem due to a
greater outflow of (highly skilled) people from these countries (relative to
migration rates from the larger states).20
In an extensive cross-country comparative case study we tackle the following
research question: How can (small) COOs enhance the application of emigrant
human capital to their economic development? We explore how migration policies
and diaspora strategies in Austria, Estonia, Ireland and Slovenia are formulated as
well as implemented. Through a desk-top analysis and in-depth interviews with
diplomats and other country representatives we examine what approaches (small)
COOs implement for managing their highly educated/qualified emigrants’
knowledge in their economic development. In particular, we research which
techniques for transforming brain drain into knowledge gain COOs implement and
how (successfully) this is executed.21 Seven different indicators are used for a
comparative analysis reflecting essential organisational determinants and values:
(1) COO approach to emigrants, (2) government body primarily responsible for
emigrant issues, (3) role of diplomacy, (4) perception of emigrants, (5) recognition
of emigrant economic value, (6) strategic framework and (7) emigrant knowledge
sharing. By identifying and merging these indicators into an original analytical
tool we contribute to developing methodology for assessing COO’s approach to
emigrants. We summarise our findings in the following section.
3. Results and Discussion
Our findings indicate that none of the four analysed countries has a
comprehensive strategy or policy targeting solely emigrants, let alone a strategy
aimed at knowledge sharing between highly qualified/skilled emigrants and the
COO. This may explain why knowledge spillovers from emigrants in all observed
countries are – for the most part – coincidental (see Table 1).22 We detect several
barriers (small) COOs encounter when trying to address migrant communities
strategically and effectively, including: indistinct allocation of responsibility, lack
of reliable migration data, negative perceptions of emigrants, underdeveloped
institutional capacity, legitimacy23 and coordination challenges, policy
fragmentation, institution diversification and inexperience, and a lack of long-term
commitment.24 We elaborate on several barriers hereinafter – also defining success
factors for emigrant engagement and knowledge sharing with COOs.
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131
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To begin with, allocation of responsibility for migrants is indistinct. As
migrants are marked by relationships with the COO, countries of residence (COR)
and the migrant community,25 it is not clear which of these entities bears the
principal responsibility for migration related issues. Although migration policies
are grounded on state sovereignty (meaning that countries in general remain
primarily responsible for migrants),26 it is not clear whether the principal
responsibility falls upon the sending or receiving countries – specifically since
migrants do not necessarily possess (solely) their COO’s citizenship, which would
grant them certain rights (and duties) in relation to the COO.27
Table 1: Comparison of Austria, Estonia, Ireland and Slovenia in their approaches
to emigrant communities
COO
approach to
emigrants
Government
body
primarily
responsible
for emigrant
issues
Role of
diplomacy
Perception of
emigrants
Austria
Centralised;
Top-down
Federal Ministry
for European and
International
Affairs28
Country of Origin
Estonia
Ireland
Centralised;
Dispersion of
Top-down
activities with a
clear coordinator;
Partnership with
emigrants;
Systematic
cooperation with
(complementary)
nongovernmental
initiatives;
Integrated
approach
Ministry of
Department of
Education and
Foreign Affairs
Research
and Trade with its
special Irish
Abroad Unit
Slovenia
Dispersion of
activities with a
clear coordinator;
Transition from
top-down to
partnership with
emigrants;
Systemic
cooperation with
nongovernmental
initiatives
Office for
Slovenians
Abroad
Emphasised in strategic and program documents;
Practice: Consular services with little or no emphasis on knowledge sharing
Passive
Passive
Active
Passive
consumers of
consumers of
participants in
consumers of
public services;
public services;
national
public services (an
Object of
Objects of
(economic)
object);
monitoring and
national
development;
Subject of
regulation
protection;
A national
partnership and
Especially the
priority, an asset
cooperation
highly educated
and qualified a
cost for COO;
Traitors (despite
past benefits to
COO)
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Gains from Diaspora’s Brain
132
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Recognition
of emigrant
economic
value
Strategic
framework
Emigrant
knowledge
sharing
Austria
Minor recognition
(economic
potentials not
addressed in an
organised or
systematic
fashion)
No specific
diaspora strategy
or migration
policy;
Proactive labour
market policy
focused on
immigrants
Mostly
coincidental
Country of Origin
Estonia
Ireland
Positive aspects
Economic
of emigration
potentials
yet to be
addressed
defined (ad hoc/
strategically and
experimental
in a targeted
activities)
fashion
No specific
diaspora
strategy or
migration
policy;
Temporary
emigration,
return
strategies;
Focus on
language as an
identity
preservation
element;
Proactive labour
market policy
focused on
immigrants
Mostly
coincidental
A structure has
emerged only
recently to
provide
motivation for and
give focus to
emigrant
engagement
(inclusion policy
as a constitutional
commitment);
Emigrant issues
holistically
integrated in
numerous national
strategic
documents (on
entrepreneurship,
employment,
science, etc.);
Practice long
before strategy
Partially strategic
Slovenia
Economic
potentials
addressed on a
project or interest
basis
Emigrant issues
integrated in
numerous national
strategic
documents, which
is not reflected in
practice
Mostly
coincidental
Consequently, formulating diaspora strategies and migration policies along
with their implementation tends to depend on a country’s interest and motivation to
engage with its emigrants. One of the main reasons for COOs to engage with
migrants is economic,29 which means a COO needs to recognise emigrants as
(potential) contributors to an economy instead of perceiving them merely as its
beneficiaries. Perceptions of migrants are nevertheless often misguided –
especially in terms of their number in both the COO and receiving countries;30 as
well as influenced by the economic situation in a country. Since fear and an
adverse attitude towards migrants stemming from such misconceptions may hinder
a COO’s relationship with emigrants, perception management becomes an
inevitable part of emigrant human capital management.31 Only once a COO
recognises its emigrants as valuable, legitimate and active partners in addressing
national issues, can it develop activities, a strategy and/or a policy geared towards
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Gains from Diaspora’s Brain
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emigrants, which could foster engagement of the latter in the COO's economic
development (e.g. through knowledge sharing).
Effect of perceptions on governmental activities aimed at emigrants is also
evident from our research findings. While Austria and Estonia, which perceive
their emigrants as passive consumers of government services and thus approach
them as objects of national protection (Estonia) or monitoring and regulation
(Austria), have no specific diaspora strategy or migration policy,32 Slovenia and
Ireland – defining their emigrants as active parties in addressing national issues –
approach them as subjects (i.e. partners in national development) and include them
in several (not necessarily interrelated or coordinated) national strategic and
legislative documents.
Not recognising the potential economic value of emigrants, Estonia has focused
its activities on cultural components (e.g. language). Austria and Slovenia, on the
other hand, are beginning to acknowledge economic potentials of their emigrants
and have started to implement certain (still fragmented) activities targeting mainly
emigrant entrepreneurs and scientists, whereas Ireland with its long history of
emigration and centuries of successful cooperation with the Irish abroad
(acknowledging their immense cultural and economic value) has defined its
emigrants as a national priority, introduced inclusion policy as a constitutional
commitment,33 and enhanced positive perceptions built throughout the years in
both the homeland and receiving states through legislative framework as well as
continuous and consistent positive government rhetoric about the Irish abroad.34
This boosts motivation for further engagement by both the COO and the Irish
abroad. Moreover, knowledge sharing with and by migrants is only stressed in
Ireland, while other three countries do not address it strategically or systematically
– with the exception of short-term study/expert exchanges; which implies COOs
mostly do not recognise emigrants as sources of relevant knowledge (unless they
return to homeland).
Though our observations indicate that a COO’s approach to emigrant
communities is contingent on perception and recognition of emigrant community’s
value by the COO’s government and inhabitants, it shows that success depends on
communication clarity,35 consistency and inclusiveness. Widespread consultation
throughout policy-making process related to migration is similarly emphasised by
the Global Commission on International Migration, which suggests dialogue
between public servants (at a national and local level),36 private sector, civil society
institutions (including NGOs), researchers and other experts in international trade
and migration.37 Yet, rare national development strategies include emigrant
networks as official partners to governments.38 Our case study points to
considerable differences between COOs, especially in terms of their inclusion of
private sector in migration policy and strategy formulation. Results indicate that
countries, which include private sector in the latter, are more successful in
achieving (strategic) knowledge sharing among and by their emigrants. Countries
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where the relationship with emigrant community is limited to public sector, on the
contrary, demonstrate lower success.
Network structure and content strongly influence effectiveness and efficiency
of knowledge creation and spillovers.39 Along with network density and
heterogeneity,40 strength of ties41 can impact the success of diaspora strategies and
migrant policies extensively – also due to its effect on communication processes.
While strong ties spark emotional linkages and frequent, routine interactions, weak
ties that lack the same emotional strength unite diverse networks and thus increase
the pool of (assorted) resources available to network members.42 In the context of
international migration prevalence of either strong or weak ties within a migrant
social network can have direct impact on continued isolation from or the level of
integration into the destination society in COR. This can influence knowledge
sharing, since integration into COR allows emigrants to upgrade, develop and
complement their knowledge with knowledge from the host society, whereas
maintained connectedness with the COO enables emigrants to comprehend both
the knowledge-related needs in the COO and the adaptations required for
knowledge to be applicable in the new context.
Grieco43 suggests that migration based on movement of individuals (e.g. labour
migration) encourages preponderance of weak ties within social networks and
forces migrants to establish the majority of their ties with members of the host
society. Migration based on movement of social units (such as family migration)
on the other hand encourages preponderance of strong ties in migrant networks,
whereby the need for additional ties with members of the host community is
reduced and (international) knowledge sharing impaired. We have not observed
indications of diversified strategies considering this aspect of network structure in
any of the four analysed countries. In fact, we have observed little diversification
in terms of diaspora strategy or migration policy in general.
A COO nevertheless does not commit the same amount of resources to all its
relationships,44 rather it acts strategically. We discover that small COOs tend to
address the successful (and not necessarily more educated or qualified) members of
their migrant communities, who are already actively involved with the homeland
(i.e. have stronger ties to the COO regardless of the strength of their ties to other
emigrants or to the COR) – preferably to their passive counterparts (irrespective of
the sector they operate in). They address individuals or migrant groups who (wish
to) establish a relationship with their homeland themselves (and are hence easier to
identify and locate), are motivated to contribute to the COO’s economic
development and growth and have sufficient resources to do so.45 This in turn
reduces investments needed for nurturing relationships with migrant communities,
since little or no additional effort is required for achieving engagement.
Strategically directing the latter can thus become a priority.
In addition to migrant networks, institutional networks addressing emigrants
are crucial. Among the four analysed COOs these are the most elaborate and
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Gains from Diaspora’s Brain
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heterogeneous in Slovenia and Ireland, where numerous ministries are involved in
establishing and maintaining a relationship with emigrants.46 To ensure their
coordinated efforts both countries have special units focusing solely on their
nationals abroad: the Irish Abroad Unit is part of the Irish Department of Foreign
Affairs and Trade, while the Office for Slovenians Abroad is an independent
Slovenian ministry. They cooperate with both governmental and nongovernmental
initiatives: systemically but not necessarily systematically in Slovenia,47 and less
systemically but more systematically and complementarily in Ireland.
Heterogeneity at the institutional level enables wider reach along with a more
targeted approach; a coordinating body, on the other hand, promotes
complementarity and synergies between activities.
For diaspora strategies and migrant policies to function, bridge(s) between
migrant and institutional networks are pivotal, though.48 Both Slovenia and Ireland
hence consult their emigrants when formulating activities aimed at emigrant
engagement. Their approach is more structured49 than that of Estonia50 and Austria.
Through the Global Irish Economic Forum and the Global Irish Network Ireland
addresses its senior and most influential migrant decision makers from private
sector, gives structure to political debate, directs it according to COO's needs and
national strategic goals, as well as systematically incorporates results of
consultations into national strategies and/or policies.51 Slovenia focuses its efforts
on scientists and academia rather than entrepreneurs or businessmen. Yet, it is less
systematic: it neither directs the debate nor includes consultation results in national
strategic documents or policies methodically. Consultations are a formality,
influencing perceptions of the COO by emigrants rather than vice versa. Such
loose structure could explain Slovenia’s smaller success in achieving cooperation
with its emigrant scientists and entrepreneurs (not a focal point of the COO in
terms of knowledge sharing).52
Heterogeneity of network partners can create gulfs and schisms hindering
information exchange, however:53 Not solely heterogeneity of partners within a
network but also heterogeneity of partners linking networks matters. According to
Sirmon and Lane a fit in national as well as professional and organisational
cultures is crucial as it increases partner learning.54 This is due to the fact that
learning is cumulative and greatest when it is related to something already
known.55 The same holds for networking: network members are most likely to
create (communication) ties with counterparts they perceive as similar.56 Through
our study we confirm these conclusions for the context of international migration.
Ireland (the sole analysed country with a strategic approach to knowledge sharing
with its diaspora and the country with least coincidental knowledge sharing) for
instance achieves clearer and more targeted communication of its goals and
expectations to emigrants through employing the department or government
institution with relevant expert knowledge for a specific task,57 whereas Estonia
with its culture-centred and correspondingly centralised approach to migrants fails
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136
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to address the business or scientific diaspora more effectively as the designated
ministry lacks the skills related to effective communication and cooperation with
those particular migrant segments. In other words: deficit of inter-functional or
inter-specialty knowledge about problem constraints can cause the so called
glitches (i.e. unsatisfactory results), which can be avoided by ensuring that network
partners are cognizant of constraints and opportunities outside the area of their
expertise.58 The same applies in COO-emigrant relationships in terms of
knowledge sharing: parties involved require prior knowledge sharing skills for the
process to succeed. Training for knowledge sharing among both officials and
residents in the COO and emigrants (as well as residents in COR for higher value
added in the knowledge shared) is needed.59 With this phase often being excluded,
knowledge sharing frequently fails.60
4. Conclusions
Recognition of emigrants’ value accompanied by clear communication of the
latter in both the COO and COR fosters positive perceptions of emigrants and
allows for an engaging environment to develop. Adding structure to activities can
further enhance positive perceptions and facilitate engagement, while networking
both with (successful) emigrants from different sectors and between institutions
increases effectiveness of strategy and policy formulation as well as
implementation. To transcend a less strategic approach to emigrants (and
coincidental results of their engagement) and to develop an enabling structure,
COOs need to surpass numerous barriers: assume responsibility for emigrants,
recognise their potential (economic) value, conduct (continuous and reliable)
research, address negative perceptions, form a clear and cohesive communication
strategy, tackle the underdeveloped institutional capacity, legitimacy and
coordination challenges (also through inclusion of both private and public sector
(emigrant) representatives from sending and receiving countries in policy
formulation and implementation), policy fragmentation, lack of long-term
commitment, etc.
Both emigrant and institutional network structures need to be considered when
preparing diaspora strategies and migration policies, as they have a profound
impact on the latter’s success – particularly in terms of knowledge sharing.
Moreover, especially small countries with limited resources (should) focus on the
successful migrants, who already are or wish to become engaged with their COO
and possess sufficient resources. COOs should nevertheless not be disillusioned:
their future policy choices too will at best have a limited effect on accumulation
and dissemination of knowledge (especially due to the elusive, complex and ever
changing nature of migration). By implementing a structured, strategic (directing
cooperation according to national needs and goals) and cooperative approach (not
necessarily through joint, but rather complementary activities), COOs can enhance
wanted results of emigrant engagement.
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137
Gains from Diaspora’s Brain
__________________________________________________________________
Our study overviews key considerations for formulating and implementing
diaspora strategies and migration policy from a COO perspective, introduces
dimensions for assessing COO approaches to emigrants, and provides empirical
evidence of the importance of perceptions, communication, network structure and
content in the context of addressing international migration. Further analysis of
both migrant and institutional networking along with their interactions with a
special emphasis on knowledge sharing is needed to better comprehend the
mechanisms behind the phenomenon.
Notes
1
Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press,
1990); Bruce Kogut, ‘Country Capabilities and the Permeability of Borders’,
Strategic Management Journal 12 (1991): 33–47; Dominick Salvatore, Marjan
Small Countries in a Global Economy: New
Challenges and Opportunities
2
Porter, The Competitive Advantage of Nations; Salvatore,
Damijan, Small Countries in a Global Economy: New Challenges and
Opportunities
Globalisation’ (contribution at 14th Statistical Days 2004 by Statistical Society of
Slovenia and Statistical Office of the Republic of Slovenia, Radenci, Slovenia,
November 8–10, 2004).
3
Margaret E. Keck and Kathryn Sikkink, ‘Transnational Advocacy Networks in
International and Regional Politics’, International Social Science Journal 51.159
(1999): 89–101; Bill Donaldson and Tom O'Toole, Strategic Market Relationships:
From Strategy to Implementation
Considerations’, Business Network Learning
Pergamon, 2001), 1–13.
Paul S. Adler and Seok-Woo Kwon, ‘Social Capital: Prospects for a New
Concept’, Academy of Management Review 27.1 (2002): 26.
5
Martin Christopher, Adrian Payne and David Ballantyne, Relationship
Marketing: Creating Stakeholder Value (Oxford: Butterworth-Heinemann, 2007).
6
Kirsi Mukkala, ‘Knowledge Spillovers: Mobility of Highly Educated Workers
within the High Technology Sector in Finland’, Migration and Human Capital,
4
7
Wendy Larner, ‘Expatriate Experts and Globalising Governmentalities: The New
Zealand Diaspora Strategy’, Transactions of the Institute of British Geographers,
New Series 32.3 (2007): 331–345.
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138
__________________________________________________________________
8
From Global to Metanational:
How Companies Win in the Knowledge Economy (Boston, Massachusetts: Harvard
Business School Press, 2001).
9
Drain?’, Finance & Development: A Quarterly Magazine of the IMF 36.2 (1999):
n.pag., viewed 14 March 2013,
http://www.imf.org/external/pubs/ft/fandd/1999/06/carringt.htm; Uwem E. Ite,
‘Turning Brain Drain into Brain Gain: Personal Reflections on Using the Diaspora
Option’, African Issues 30.1 (2002): 76–80; UN-DESA and OECD, ‘World
Migration in Figures’ (a joint contribution by UN-DESA and the OECD to the
United Nations High-Level Dialogue on Migration and Development, New York,
10
Marco Stampini, Calogero Carletto and Benjamin Davis, ‘International
Migration from Albania: The Role of Family Networks and Previous Experience’,
Eastern European Economics
11
-Christophe Dumont and Georges Lamaître, ‘Beyond the Headlines: New
Evidence on the Brain Drain’, Revue Économique 56.6, Localisation, Migrations et
Connecting with Emigrants: A Global
Profile of Diasporas (Paris: OECD Publishing, 2012).
12
Rubin Patterson, ‘Transnationalism: Diaspora-Homeland Development’, Social
Forces
13
We adopt the concept of knowledge sharing rather than knowledge transfer as it
implies a two-way (cooperative) relational process in which multiple exchanges
among knowledge senders and receivers (these roles being interchangeable) occur
– leading to acquisition, adaptation and use of (new) knowledge by all parties
involved in the (win-win) exchange(s). Knowledge transfer on the other hand
suggests a one-way transaction not allowing for appropriations of knowledge
transferred. See also Minu Ipe, ‘Knowledge Sharing in Organizations: A
Conceptual Framework’, Human Resource Development Review
359.
14
Larner, ‘Expatriate Experts and Globalising Governmentalities: The New
Zealand Diaspora Strategy’, 331–345.
15
Denice E. Welch, et al., ‘The Importance of Networks in Export Promotion:
Policy Issues’, Journal of International Marketing 6.4 (1998): 66–82.
16
See for example Ikujiro Nonaka and Hirotaka Takeuchi, The KnowledgeCreating Company: How Japanese Companies Create the Dynamics of Innovation
(New York: Oxford University Press, 1995).
17
Dina Ionescu, Engaging Diasporas as Development Partners for Home and
Destination Countries: Challenges for Policymakers (Geneva: International
Organization for Migration, 2006); Alexander Oettl and Ajay Agrawal,
‘International Labour Mobility and Knowledge Flow Externalities’, Journal of
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139
Gains from Diaspora’s Brain
__________________________________________________________________
Business Studies 39.8 (2008): 1242–
N. Blakeney, ‘Repatriating Knowledge: Variables Influencing the ''Transfer''
Process’, Journal of International Business Studies 40.2 (2009): 181–199.
18
For an overview of theories on migration policy see Christina Boswell,
‘Theorizing Migration Policy: Is There a Third Way?’, International Migration
Review 41.1 (2007): 75–100.
19
Diaspora is emphasised due to its high intrinsic motivation for investing both
human and financial resources in its COO. Consequently, less effort for igniting
and maintaining this emigrant segment’s engagement is required. See also
Yevgeny Kuznetsov, ed., Diaspora Networks and the International Migration of
Skills: How Countries Can Draw on Their Talent Abroad (Washington, DC: The
International Bank for Reconstruction and Development/The World Bank, 2006).
20
Carrington and Detragiache, ‘How Extensive is the Brain Drain?’, n.pag.
21
Our research was conducted between 2012 and 2014. Please note, that (although
we did consider some future country plans) we did not include initiatives drafted
after the study had been finalised. All country specific findings thus apply to the
period up to 2014 when the study was concluded.
22
See also Kuznetsov, Diaspora Networks and the International Migration of
Skills: How Countries Can Draw on Their Talent Abroad
23
Emigrants contributed to national economies without – or in spite of – incentives
in the past. As members of an expanded civil society they have often operated as
pressure groups, which is why they do not wish to be included in joint activities
with the government. Some authors argue that numerous diaspora and other
emigrant successes have been possible specifically because of their invisibility to
governments: integrating emigrants and development into a more explicit agenda
could transform migrant efforts to capturable and cooptable by governments. See
Ionescu, Engaging Diasporas as Development Partners for Home and Destination
Countries: Challenges for Policymakers, 7–
‘Creating an Enabling Environment for Diasporas' Participation in Homeland
Development’, International Migration
24
See Alan Gamlen, ‘Diaspora Engagement Policies: What are They, and What
Kinds of States Use Them?’, Centre on Migration, Policy and Society Working
Paper No. 32
http://www.academia.edu/1229730/Diaspora_Engagement_Policies_What_Are_Th
ey_and_What_Kinds_of_States_Use_Them_Centre_on_Migration;
Ionescu,
Engaging Diasporas as Development Partners for Home and Destination
Countries: Challenges for Policymakers, 7–85; IOM, World Migration Report
2010: The Future of Migration: Building Capacities for Change (Geneva:
International Organization for Migration, 2010).
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140
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25
Diasporas in the Contemporary World (Cambridge: Polity
Press, 2009).
26
This is not to say that countries alone (should) manage relations with and among
migrants. Although migration has historically been shaped and restrained by statecentred, territorially bound forms of governance and despite nation-states’
continuous attempts to (re)define migration as a political phenomenon (thereby
stating primate over it), some authors argue for marketization of migration – i.e.
migration governed by market forces (see for example Adrian Favell and Randall
Hansen, ‘Markets against Politics: Migration, EU Enlargement and the Idea of
Europe’, Journal of Ethnic and Migration Studies 28.4 (2002): 581–601.), while
others favour international cooperation on migration (see for example Alan O.
Sykes, ‘International Cooperation on Migration: Theory and Practice’, The
University of Chicago Law Review 80.1 (2013): 315–340.).
27
Unlike groups based on the principle of ethnicity, not all migrants (e.g.
diasporans) are officially recognis
‘Problematizing a Palestinian Diaspora’, International Journal of Middle East
Studies
28
Now Federal Ministry of Europe, Integration and Foreign Affairs.
29
Delphine Ancien, Mark Boyle and Rob Kitchin, ‘Exploring Diaspora Strategies:
An International Comparison’ (paper presented at NUI Maynooth Workshop,
30
International migrants are extremely elusive: roughly one third re-migrate
internationally – to their COO or to third countries; while many move within the
receiving state. They are, furthermore, usually not obliged to report a change in
Brigitte Waldorf and Leo van Wissen, ‘Migration in a Globalised World: A New
Paradigm’, Migration and Human Capital: Regional and Global Perspectives, eds.
Extraordinary and Plenipotentiary of the Republic of Estonia to the Kingdom of
Office for Slovenians Abroad, 16 December 2013.
31
See also IOM, World Migration Report 2011: Communicating Effectively about
Migration (Geneva: International Organization for Migration, 2011).
32
In Estonia, where perceptions of emigrants are utterly negative both among
government officials and the general public (which is why officials are neither
motivated to address emigrants nor pressured by the public to do so), activities
targeting emigrants are mostly ad hoc – in early testing and discussion phases (see
Antsu, interview with Ambassador Extraordinary and Plenipotentiary of the
Republic of Estonia to the Kingdom of Belgium.).
33
See Constitution of Ireland (1937), Article 2, viewed 15 September 2013.
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141
Gains from Diaspora’s Brain
__________________________________________________________________
http://www.irishstatutebook.ie/en/constitution/index.html.
34
See Eamon Gilmore, ‘Speech’ (remarks by the Tánaiste at Global Diaspora
Forum, Dublin, Ireland, May 14, 2013).
35
Although most Slovenians in Slovenia for instance assess that Slovenian experts
living abroad should advise Slovenia on how to emerge from the crisis (59%
surveyed believe this is their duty) and that emigrant Slovenians (due to experience
gained abroad) have more knowledge for coping with crisis, emigrants do not
detect a want or need by the homeland for their assistance (see Ana Ovsenik,
Siol.net
http://www.siol.net/novice/slovenija/2014/06/pomoc_diaspore.aspx.). Such a gap
between expectations of Slovenians in Slovenia and detection of these expectations
among emigrants abroad (as well as perceived expectations of Slovenians in
homeland in relation to Slovenian emigrants at the government level) implies a
deficient and unsuccessful government communication with either Slovenians in
Slovenia (i.e. the country does not detect the needs in the 'home market') or with
emigrants (i.e. the country detects the needs in Slovenia, but does not communicate
them to emigrants).
36
Even if migration policies are usually formulated at a national level, the primary
immediate point of contact for migrants. See UN-DESA, ‘Highly Skilled
Migration’ (paper presented by International Centre for Migration Policy
Development at the fourth coordination meeting on international migration,
37
Global Commission on International Migration, Migration in an Interconnected
World: New Directions for Action: Report of the Global Commission on
International Migration (Geneva: Global Commission on International Migration,
2005).
38
Ionescu, Engaging Diasporas as Development Partners for Home and
Destination Countries: Challenges for Policymakers, 7–85.
39
Simon Rodan and Charles Galunic, ‘More than Network Structure: How
Knowledge
Heterogeneity
Influences
Managerial
Performance
and
Innovativeness’, Strategic Management Journal 25.6 (2004): 541–562.
40
We have noted differences in success of knowledge sharing based both on
network density and heterogeneity: whereas sparse ties confer benefits of access to
a wide range of diverse knowledge, dense networks (due to information similarity
– sometimes even redundancy) provide a platform for regular interaction. See Alex
Eapen, ‘Social Structure and Technology Spillovers from Foreign to Domestic
Firms’, Journal of International Business Studies 43.3 (2012): 244–263.
41
Strength of ties refers to ‘the amount of time, the emotional intensity, the
intimacy (mutual confiding), and the reciprocal services which characterize the tie’
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142
__________________________________________________________________
(Mark S. Granovetter, ‘The Strength of Weak Ties’, American Journal of
Sociology 78.6 (1973): 1361.).
42
Douglas T. Gurak and Fe Caces, ‘Migration Networks and the Shaping of
Migration Systems’, International Migration Systems: A Global Approach, eds.
Mary M. Kritz, Lin Lean Lim and Hania Zlotnik (Oxford: Oxford University Press,
176.
43
Elizabeth M. Grieco, ‘The Effects of Migration on the Establishment of
Networks: Caste Disintegration and Reformation among Indians of Fiji’,
International Migration Review
44
Christopher, Payne and Ballantyne, Relationship Marketing: Creating
Stakeholder Value.
45
Prior research shows that successful migrant community members may be in a
better position to contribute to a COO’s development (through either access to
finance or powerful segments in the receiving country as well as through
contributing to greater production efficiency) than the highly educated (see for
example Gabriel Sheffer, ‘Israel Diaspora Relations in Comparative Perspective’,
Israel in Comparative Perspective: Challenging the Conventional Wisdom, ed.
Michael N. Barnett (Albany: State University of New York Press/SUNY Press,
).
46
Responsibility for migrant issues at the ministerial level may be more efficient
and influential relative to allocating responsibility to specialised agencies or
offices, as it enables faster awareness raising, allows for greater top-down effects
over other bodies and agencies and thus creates more potential synergies.
47
In Slovenia intra-governmental cooperation takes place on a project-to-project
basis. This hinders continuity of relations with and among institutions (Marina
-Hacin, interview with Head of Slovenian Migration Institute – ISIM, ZRC
48
For a more detailed discussion on bridging social capital see Ronald S. Burt,
‘The Network Structure of Social Capital’, Research in Organizational Behaviour
22 (2000): 345–423;
‘Digital Diasporas and Conflict
Prevention: The Case of Somalinet.com’, Review of International Studies 32.1
(2006): 25–47
nifer Brinkerhoff, eds., Converting
Migration Drains into Gains: Harnessing the Resources of Overseas Professionals
(Manila: Asian Development Bank, 2006).
49
Madden notes that establishing structures in Ireland, which link emigrants to
national strategic goals, have reignited motivation for engagement, enabled
emigrant inclusion and gave it more focus. Irish emigrants have become more
recognised for their contributions to Ireland’s development and hence
acknowledged as an important national asset (Ciaran Madden, telephone interview
with Head of Irish Abroad Unit, 4 December 2013.).
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143
Gains from Diaspora’s Brain
__________________________________________________________________
50
In Estonia migrant entrepreneurs are (also due to their limited number) always
addressed – however, not necessarily by the state, but rather by their private sector
counterparts (see Antsu, interview with Ambassador Extraordinary and
Plenipotentiary of the Republic of Estonia to the Kingdom of Belgium.).
51
See for example Department of Foreign Affairs and Trade, ‘Minister Martin
Announces Global Irish Economic Forum Initiatives in Asia’, Press Release,
https://www.dfa.ie/news-and-media/press-releases/press-releasearchive/2010/may/global-irish-economic-forum/; Gilmore, ‘Speech’; Madden,
telephone interview with Head of Irish Abroad Unit.
52
53
Anthony Goerzen and Paul W. Beamish, ‘The Effect of Alliance Network
Diversity on Multinational Enterprise Performance’, Strategic Management
Journal 26.4 (2005): 333–354.
54
International Alliance Performance’, Journal of International Business Studies
35.4 (2004): 306–319.
55
Wesley M. Cohen and Daniel A. Levinthal, ‘Absorptive Capacity: A New
Perspective on Learning and Innovation’, Administrative Science Quarterly 35.1
(1990): 128–152.
56
International Migration Review
57
For more effective communication, for instance, knowledge sharing with Irish
diasporans involved in the food and drinks industry is coordinated and managed by
the Department of Agriculture, Food and the Marine.
58
David G. Hoopes and Steven Postrel, ‘Shared Knowledge, “Glitches,” and
Product Development Performance’, Strategic Management Journal 20 (1999):
59
Absorptive capacity of both the COO and the emigrant community (i.e. their
ability to understand new external knowledge, assimilate this knowledge and apply
it) should be fostered (see Cohen and Levinthal, ‘Absorptive Capacity: A New
Perspective on Learning and Innovation’, 128–152.).
60
Liesl Riddle, conversation with Elliott School of International Affairs faculty
member
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World: A New Paradigm’. Migration and Human Capital: Regional and Global
Perspectives
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1990.
Rodan, Simon and Charles Galunic. ‘More than Network Structure: How
Knowledge
Heterogeneity
Influences
Managerial
Performance
and
Innovativeness’. Strategic Management Journal 25.6 (2004): 541–562.
Small Countries
in a Global Economy: New Challenges and Opportunities. Chippenham: Palgrave,
2001.
Sheffer, Gabriel. ‘Israel Diaspora Relations in Comparative Perspective’. Israel in
Comparative Perspective: Challenging the Conventional Wisdom, edited by
Press, 1996.
International Alliance Performance’. Journal of International Business Studies
35.4 (2004): 306–319.
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from Albania: The Role of Family Networks and Previous Experience’. Eastern
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Contribution at 14th Statistical Days 2004 by Statistical Society of Slovenia and
Statistical Office of the Republic of Slovenia, Radenci, Slovenia, November 8–10,
2004.
Sykes, Alan O. ‘International Cooperation on Migration: Theory and Practice’. The
University of Chicago Law Review 80.1 (2013): 315–340.
UN-DESA. ‘Highly Skilled Migration’. Paper presented by International Centre
for Migration Policy Development at the fourth coordination meeting on
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Gains from Diaspora’s Brain
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——— and OECD. ‘World Migration in Figures’. A joint contribution by UNDESA and the OECD to the United Nations High-Level Dialogue on Migration
Welch, Denice E., Lawrence S. Welch, Louise C. Young and Ian F. Wilkinson.
‘The Importance of Networks in Export Promotion: Policy Issues’. Journal of
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nifer Brinkerhoff, eds. Converting Migration Drains into
Gains: Harnessing the Resources of Overseas Professionals. Manila: Asian
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Iris Koleša specialises in diplomacy, marketing and public relations. As a
researcher at the Centre of International Relations, University of Ljubljana, she
focuses on migration, knowledge transfer, networking and internationalisation. Her
expertise is reflected through her involvement in preparation of strategic and
program documents as well as policy recommendations at both the regional and
national levels.
, professor and research fellow at the Centre of International
Relations, University of Ljubljana, earned her experience from several academic
and applied international research projects related to internationalisation, export,
FDI, MNEs and their effects on competitiveness, growth, productivity and
innovation.
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150
Sibylle Heilbrunn and Ivan Diego Rodriguez
Abstract
The purpose of this chapter is to analyse the failure of a public programme aimed to
train Ethiopian unemployed academics as mentors for Ethiopian small business
owners. The programme is located within the concept of niche entrepreneurship
policy described by Stevenson and Lundstroem1 as cases in which the government
formulates targeted entrepreneurship action around specific and often weakened and
marginalized groups of the population. The Israeli government has promoted niche
entrepreneurship policy towards a number of groups identified as weakened and
marginalized for various reasons. The Ethiopian community constitutes one of these
groups. In order to situate the problem within a wider European context, the chapter
focuses on evidence derived from the ‘Community-Based Business Support (CBBS)
model first implemented in the UK. A tentative benchmarking exercise provides
some plausible explanations behind the striking difference in impact and
sustainability of two different types of policy measures to deliver business support to
a group that mainstream agencies find difficult to reach. Although goals are similar,
the Israeli Centre for the Promotion of Entrepreneurship (CPE) programme is mainly
focused on the individual, whereas the business support function in the CBBS model
is embedded in community organizations.
Key Words: Policy
entrepreneurship Israel.
making,
support
programmes,
mentorship,
failure,
*****
1. Introduction
Although positive relation between economic growth and entrepreneurship has
been extensively documented in the academic literature during the last decade,2
there is controversy about pros and contras of entrepreneurship policy.3 Shane4
maintains that when controlling for other cross country differences the number of
business owners in a country is negatively associated with economic growth.5 Some
maintain that policies fostering entrepreneurship might lead to encouragement of
inefficiencies,6 others claim that policies may assist disadvantaged populations to
overcome barriers to entrepreneurship and thereby lead to more overall social and
economic integration.7
Policies fostering migrant and minority entrepreneurship are labelled by
Stevenson and Lundstroem8 niche entrepreneurship ‘in which case the government
formulates targeted entrepreneurship around specific groups of the population’.9
This type of policy is aimed at groups that are often underrepresented as
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Wrong-Headed Assumptions, Unintended Outcomes: The Case of
a Migrant Business Support Scheme in Israel
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
entrepreneurs and business owners and the aim of polices is to address particular
difficulties in order to solve high rates of unemployment or labour market
integration problems thereby advancing social inclusion objectives.10 In the 2014
Policy Report 'The Missing Entrepreneurs’ the OECD tackles the same topic using
the term 'inclusive entrepreneurship' defined as entrepreneurship that contributes to
social inclusion and thus gives all people an equal opportunity to start and operate a
business.11 In line with this definition, the OECD policy targets disadvantaged and
underrepresented groups including youth, women, seniors, ethnic minorities and
migrants. Often these policies target migrants based on the assumption that their
potential lack of economic and social resources may cause not only lack of ability to
compete in a modern economy but also diminished probability of building strong
community institutions which could allow for long-term integration.
Entrepreneurship then is understood as one important factor in determining
immigrants' potential labour market and social integration.12
Our chapter is a tentative benchmarking exercise and aims at providing some
plausible explanations for the striking difference in impact and sustainability of two
different types of policy measures with the same goal but different focus: the UKbased ‘Community-Based Business Support’ (CBBS) programme which focuses on
the environment and community versus the ‘Israeli Centre for Promoting
Entrepreneurship’ programme which has an individual focus.
Within the framework of the rationale of niche entrepreneurship, the Israeli
government has promoted policies towards a number of groups identified as
weakened and marginalized for various reasons (Ministry of Economy and Industry,
Israel 2015). The Ethiopian community constitutes one of these groups and can be
described as marginalized in terms of Berry's typology of acculturation.13
Marginalization is the form of acculturation where the ethno-cultural group in
question does neither manage to maintain its heritage and nor adapt to the culture of
the larger society and is thereby excluded.14
2. The Ethiopian Community in Israel
The Ethiopian community amounts to about 1.5% of the total of the Israeli
population. Most Ethiopians immigrated to Israel in the mid-1980s and early 1990s.
Upon arrival in Israel the Ethiopian Jews are granted equal rights and
responsibilities in all major spheres of life and, like all Jewish immigrants, they are
entitled to benefits such as subsidized public housing, aid with rent during the first
years after arrival, cash payments and free tuition at Hebrew language schools.15 But
despite these and additional governmental efforts, the Ethiopian community in Israel
is one of the poorest and most segregated, remaining largely excluded from the
labour force, living in poverty, depending on welfare as a main source of livelihood,
and residing in disadvantaged neighbourhoods.16 In addition, the blackness of
Ethiopian immigrants positions them as the most visible minority among Jewish
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152
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Israeli population. Moreover, the black Ethiopian community provoked for the first
time a debate regarding race and Jewishness in Israel.17
Although Israel is part of the Global Entrepreneurship Monitor (GEM) Project18,
there is no systematic track record of the level and nature of entrepreneurial activity
of the Ethiopian community living in Israel. Based on estimations of experts the rate
of entrepreneurship among the Ethiopian community is significantly lower than that
of the overall Israeli population.
3. The Organizational Context
Since the 1990s – due to the need to deal with a wave of massive immigration
from the Former Soviet Union, state authorities established a number of frameworks
supporting entrepreneurs.19 Centres for the Promotion of Entrepreneurship (CPEs)
are an example of these frameworks. These Centres of the Israel Small and Medium
Enterprises Authority are non-profit organizations established by the Ministry of
Economics, in which various government ministries, chambers of commerce, banks
and business people cooperate. The Israel Small and Medium Enterprises Authority
(ISMEA) engages in establishing and supporting the operation of CPEs all over
Israel. They act as one-stop-shops for business owners or entrepreneurs by providing
a package of services for their own benefit and successful business performance.
The main services include professional advice in a wide range of areas, training and
reference to sources of finance. Initially CPEs were spread all over the country for
local approachability. Later on, some of the centres started to focus upon special
groups such as new immigrants from the Caucasus, ultra-Orthodox Jews, and Druze,
Arab and Bedouin citizens of Israel.
The programme under investigation in this chapter was initiated in 2009 by the
Director of one of the CPEs. He had encountered difficulties with convincing
Ethiopian SME (Small and Medium Enterprise) owners to participate in courses and
mentorship programmes at the CPE and was also aware of the fact that many
Ethiopian university graduates were unemployed, or at least not working in the field
of their academic education.
4. Description of the CPE Programme and Data Collection
The CPE programme is presented in Table 1 in terms of the involved parties and
the purpose and planned activities at each stage.
Data were collected in 2010-2011 using a combination of methods i.e.
questionnaires, focus groups, structured and semi-structured interviews. After
negotiating access to all information sources with the involved stakeholders, an
overview of the research tools was sent to and confirmed by CPE Netanya.
Twenty-one young academics took part in the CPE project. All of them met the
necessary criteria, having either an academic or a technician degree. No candidate
was rejected. The mean age of twenty participants was 28, one of them was 57.
Forty percent were women and nineteen held a BA certificate from accredited
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Sibylle Heilbrunn and Ivan Diego Rodriguez
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
institutes of higher education and two were technicians. Four out of twenty-one
were unemployed at the beginning of the project, six were working in a job related
to their education, and eleven were employed in temporary jobs. Fourteen of the
participants were living either in or nearby the city of Netanya. Three participants
quit the programme; for one of them the course did not meet his expectations, one
left Israel and for one the work load was too heavy. Seventeen non- Ethiopian
teachers were involved in classes and three of them also functioned as mentors
during the second stage of the programme. In short, three circles of participants are
involved in the programme: Non-Ethiopian business advisors, Ethiopian academic
trainees and Ethiopian business owners.
Table 1: Description of the CPE Programme
Stage 1: Course (10 month)
Parties
involved
Purpose
Planned
activities
Stage 2: Mentorship
Learning by
Observation
(3 month)
Ethiopian mentees (18) and Ethiopian mentees
non-Ethiopian teachers (17) (15), 3 non-Ethiopian
mentors and
Ethiopian SME
owners
Providing Ethiopian mentees Training Ethiopian
with necessary knowledge
mentees in the field
10 month course with classes 3 – 5 meetings with
provided by 17 teachers,
the business owners
some of them giving one or
two lectures and some of
them teaching for 5 – 8
classes on a specific subject.
Acting as business
advisor under
supervision
Ethiopian mentees
(now Ethiopian
mentors) and
Ethiopian SME
owners
Assisting Ethiopian
SME owners
Yearlong
mentorship process
5. Findings
At stage 1 the classes taught by the seventeen teachers were evaluated by the
students via a classic feedback survey investigating the content as well as the
teaching mode. Appendix 1 presents the quantitative outcome of the survey. Overall
the students rated the classes as well as the instructors rather positively; all courses
and teachers were evaluated above the mode value. During the focus groups the
students commented on the class work:
‘I really enjoyed most of the classes, especially the ones on financing, which is a
subject I was not acquainted with at all’;
‘... some of the classes were much too short; one cannot really understand the
subject of import and export in three sessions’;
‘...most of the teachers were very good and also made an effort, it is difficult
though to study in the evenings after a long day of work’.
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In the first focus groups the students raised some issues with regard to the fact
that all instructors and teachers were non-Ethiopian. Once the issue was brought up
by a participant, others added comments such as
‘... are you sure there are no Ethiopians who could have taught part of the
courses?’ ‘...again we have to feel that we are not equal ... the whites teaching the
blacks…’
‘…also you are white – why are you doing the focus group – are you making
money from it?’
The discussion escalated and two participants left the room. Based on this
experience the focus group mediator raised the subject at the very beginning of the
second focus group. Although similar comments were made by the participants, the
discussion did not escalate and the session proceeded without further conflicts
around this particular issue. In both focus groups the participants made additional
remarks relating to the cultural interface:
‘…the teachers see us as Ethiopians and not as academics…’
‘…why is this programme addressing only Ethiopian academics, aren’t there also
non-Ethiopian academics who can't find work and want to become business
consultants?’
In both focus groups a discussion evolved among participants as to the aim of
participating in the programme: Avi (29 year old law school graduate) said ‘If I am
going to be an Ethiopian consultant for Ethiopian business owners only, that will be
a failure, I want to consult ....but not only within my community’, whereas Rose (28
year old, business school graduate) said that ‘...it would be an honour for me to be
able to consult my fellow community members who started a business’.
Interviews with five teachers of the course revealed that heterogeneity of the
group as to previous knowledge and learning ability as well as an over-ambitious
syllabus taught were shortcomings. Three of the teachers complained about lack of
motivation of some of the students and two complained about low attendance rate.
All five thought that the idea of the programme was not implemented in an optimal
way: ‘I feel that we are doing something very important here, it is a shame that these
people don't find work. But I am having a very hard time to teach, I am not sure I
know how to teach them’ (Moti) ; ‘I never feel like this when I am teaching at the
college, I have to start over again and again, and then again and again I have to
apologize for being white’ (Silvia); ‘I am really very satisfied with some of the
students; they are really good and I enjoy teaching them, but then I lose the others,
and they start to complain’ (Harold).
At the beginning of stage 2 three more students left the programme. All three of
them reported that although they did learn a lot during the course, they also
discovered that business consultation is not their occupational aim.
The remaining fifteen mentees were allocated to three non-Ethiopian mentors
who were performing business consulting to Ethiopian SME owners. The initial plan
comprised three to five triangle meetings (for each mentor, mentee and business
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Sibylle Heilbrunn and Ivan Diego Rodriguez
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
owner 'team') at the respective businesses. Only five of these meetings did
eventually take place.
All three non-Ethiopian mentors reported great logistical difficulties in setting up
the meetings with the Ethiopian mentees. Mentor 1 complained: ‘I set up the
meeting with the business owner and then asked the mentee to join me; he never had
time, always excuses, and I think he did not understand that the business owner was
the focus and not him’. Mentor 2 complained that the mentee was always late and
not prepared: ‘We set up a time to meet at a coffee shop before going together to the
business and meet the owner; but she (the mentee) was late once again, so we did
not prepare the session and nothing was learned’. Mentor 3 complained that he
actually stopped trying to set up the meetings after getting negative answers over
and over again. Interviews with the Ethiopian mentees revealed three main reasons
for the fact that the mentorship process did not really take place: Embarrassment
about entering the triangle situation was mentioned in four out of six interviews: ‘I
am an academic; now I have to meet a business owner of my community together
with a white mentor’ (Moshe, a 25 year old Business Administration graduate); Lack
of motivation to actually become a business advisor was mentioned in five out of six
interviews: "the course was interesting; I learned rather a lot of useful things. But to
be an advisor is not for me" (Mary, a 26 old social worker); Lack of sympathy/lack
of personal relations with/towards the mentors, was mentioned in four out of six
interviews: ‘He does not know anything about us; he never asks; he has no
understanding of our situation’; ‘we had better teachers than him in the course, so
why aren’t they our mentors?’; ‘I am fed up with him telling me what to do and
making me feel inferior’. Interviews with three Ethiopian business owners revealed
that they were confused with the triangle situation: ‘I did not know how to handle
this; my business advisor usually discusses very specific issues with me; suddenly I
also had to relate to the student who has no idea about my business’, (Tekela, shop
owner) and perceived the consulting sessions in which the mentee took part more of
a burden than of assistance ‘instead of going on with the budget sheet, he was
always talking to the student explaining all kinds of issues which have nothing to do
with my business’ (Getena, hairdressing business).
The last phase of the mentorship process, in which Ethiopian mentees were to act
as business advisors under supervision, never took place. Following interviews with
four mentees, two mentors, two business owners and three office holders of the
CPE, three main reasons emerged: lack of motivation of all three parties involved:
the mentees, the mentors and the business owners; lack of logistic infrastructure for
implementation, and finally the fact that the CPE manager decided (due to local
political reasons) to distribute diplomas and hold the graduation party before the last
stage of the mentoring process: ‘I needed to present some results to the stakeholders,
so I decided to distribute two different kinds of diplomas, one for those who only
took part in the course, and one for those who finished the entire mentorship
process'.
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Finally we will use the components of the CBBS model20 as a benchmark when
attempting to analyse the pitfalls of the CPE programme (Table 2):
Table 2: Components of the CPE Programme
Component
Establishing a
partnership to promote
the model
CBBS
Gathering support among key
stakeholders: Mainstream
organizations providing
business advice, community
organizations and trainee
business advisers.
Establishing a
Formation of a cadre of
professional development professionally trained and
programme for business accredited individuals as
advisers
community based business
advisors via a programme
including workshops on
business related knowledge and
advising skills.
Supporting the
introduction of business
support in community
organizations
Developing communitybased business networks
at local level
Connecting with
mainstream provision
Establishment of synergies
between business support and
other services provided by
community organizations as
well as capacity building
support
Local authorities engaged with
community organizations
offering business support
enhanced local network
development.
Effective networking and
cooperation with mainstream
business support providers.
CPE
CPE is a mainstream business
support organization, but no
additional community
organizations were involved
in the programme.
Although the content of the
programme was similar to
that of the CBBS, the
Ethiopian trainees perceived
they were pigeonholed into a
very narrowly-defined and
unambitious qualification - to
provide consultancy services
to Ethiopian SME owners
only.
The focus of the programme
was an individual one
targeting unemployed
Ethiopian academics only.
No local authorities or
community organizations
involved. The implementation
of CPE model focused on the
individual.
The connection is
straightforward as the model
was conceived, implemented
and supported by CPE, a
mainstream business support
provider.
6. Concluding Remarks
The CPE case provides an example for a road to failure of a well-intentioned
attempt initiative aimed at providing business advice to Ethiopian SME owners by
training unemployed Ethiopian academics to become business advisors.
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Sibylle Heilbrunn and Ivan Diego Rodriguez
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
One major shortcoming concerns the lack of intercultural sensitivity as
formulated by the participants in the interviews. From their point of view the
programme reinforced and reproduced once again social inequalities based on being
Ethiopians. For some of them the ‘niche’ conception of the programme was
unacceptable. In addition the goals of the programme were not clearly articulated
during the recruitment phase of the trainee business advisers, causing some of them
to leave the programme in the middle. The findings also showed that the initiative
was not embedded within existing community structures and networks. Ethiopian
community members and/or organizations were not involved in the planning process
and in the implementation of the programme. Also the Ethiopian SME owners were
not consulted prior to starting the triangle sessions which turned out to be entirely
ineffective. Whereas the CBBS model suggests establishing effective networking
and cooperation with mainstream business support providers, the CPE, although a
mainstream business support provider itself, did not initiate any additional
networking activities.
Framed within the policy of fostering niche-entrepreneurship, the CPE is rather
exclusive, individually and short-term oriented in comparison to the CBBS model
which is framed within the concept of inclusive entrepreneurship, community-based
and long-term oriented. It seems that this difference in framing can explain the
striking difference in impact and sustainability of the two policy measures with the
same goal but different foci and outcomes.
Notes
1
Lois A. Stevenson and Anders Lundström, Patterns and Trends in
Entrepreneurship/SME Policy and Practice in Ten Economies, Vol. 3 (n.a.:
Elanders Gotab, 2001).
2
Zoltan J. Acs, David B. Audretsch, Pontus Braunerhjelm, and Bo Carlsson,
‘Growth and Entrepreneurship’, Small Business Economics 39.2 (2012): 289-300;
Jolanda Hessels, and Andre van Stel, ‘Entrepreneurship, Export Orientation, and
Economic Growth,’ Small Business Economics 37.2 (2011): 255-268; Anil
Rupasingha and Stephan Goetz, ‘Self-employment and Local Economic
Performance: Evidence from US Counties’, Papers in Regional Science 92.1
(2013): 141-161.
3
Leonard Bisk, ‘Formal Entrepreneurship Mentoring: The Efficacy of Third Party
Managed Programs’, Career Development International 7.5 (2002): 262-270.
4
Scott Shane, ‘Why Encouraging More People to Become Entrepreneurs Is Bad
Public Policy’, Small Business Economics 33.2 (2009): 141-149.
5
Ibid.
6
Paul Nightingale and Alex Coad, ‘Muppets and gazelles: political and
methodological biases in entrepreneurship research’. Industrial and Corporate
Change 23.1 (2014): 113-143; Robert. J. Bennett, Entrepreneurship, Small
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
158
159
__________________________________________________________________
Business and Public Policy: Evolution and Revolution (New York: Routledge),
2014.
7
Sibylle Heilbrunn and Nonna Kushnirovich, ‘The Impact of Policy on Immigrant
Entrepreneurship and Businesses Practice in Israel’, International Journal of
Public Sector Management 21.7 (2008): 693-703; Miri Lerner and Gila Menahem,
‘Decredentialization and Recredentialization: The Role of Governmental Support
in Enhancing Occupational Opportunities of Immigrants: The Case of Russian
Immigrants in Israel in the 1990s’, Work and Occupations 30.1 (2003): 3-29.
8
Stevenson and Lundström, Patterns and Trends in Entrepreneurship/SME Policy
and Practice in Ten Economies; Lois Stevenson and Anders Lundström, ‘Dressing
the Emperor: The Fabric of Entrepreneurship Policy’, Handbook of Research on
Entrepreneurship Policy, ed. David B. Audretsch, Isabel Grilo and Roy Thurik
(Cheltenham, UK: Edwin Elgar, 2007), 94-129.
9
Stevenson and Lundström, Patterns and Trends in Entrepreneurship/SME Policy
and Practice in Ten Economies, 6.
10
Ibid.
11
OECD, The European Commission, The missing entrepreneurs: Policies for
inclusive entrepreneurship in Europe,’ OECD Publishing, 2013. Viewed on 17
August 2015. http://www.oecd.org/cfe/leed/missing-entrepreneurs.htm.
12
Dimitris Georgarakos and Konstantinos Tatsiramos, ‘Entrepreneurship and
Survival Dynamics of Foreign-Born and US-Born Immigrants’, No. 1150. IZA
Discussion Paper, (2007); Robert D. Fairlie, ‘Entrepreneurship among
Disadvantaged Groups: An Analysis of the Dynamics of Self-Employment by
Gender, Race, and Education’, Handbook of Entrepreneurship, Volume 2: 437478, eds. Simon C. Parker, Zoltan J. Acs, and David B. Audretsch (Dordrecht, the
Netherlands: Kluwer Academic Publishers, 2005); Sibylle Heilbrunn and Nonna
Kushnirovich, ‘The Impact of Policy on Immigrant Entrepreneurship and
Businesses Practice in Israel’, International Journal of Public Sector Management
21.7 (2008): 693-703; Charlotta Hedberg and Katarina Pettersson, ‘Disadvantage,
Ethnic Niching or Pursuit of a Vision?’ Journal of International Migration and
Integration 13.4 (2012): 423-440.
13
John Berry, ‘A Psychology of Immigration’, Journal of Social Issues 57 (2001):
615-631.
14
Erik H. Cohen, ‘Impact of the Group of Co-Migrants on Strategies of
Acculturation: Towards an Expansion of the Berry Model’, International
Migration 49.4 (2010).): 1-22.
15
Shalva Weil, ‘Religion, Blood and the Equality of Rights: The Case of Ethiopian
Jews in Israel’, International Journal on Minority and Group Rights 4 (1997): 397415.
16
Shira Offer, ‘The Ethiopian Community in Israel: Segregation and the Creation
of a Racial Cleavage’, Ethnic and Racial Studies 30.3 (2007): 461-480
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Sibylle Heilbrunn and Ivan Diego Rodriguez
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
17
Ibid.; Nelly Elias and Adriana Kemp, ‘The New Second Generation: Non-Jewish
Olim, Black Jews and Children of Migrant Workers in Israel’., Israeli Studies 15
(2010): 73-94.
18
http://www.gemconsortium.org/
19
Miri Lerner and Gila Menahem, ‘Decredentialization and Recredentialization:
The Role of Governmental Support in Enhancing Occupational Opportunities of
Immigrants: The Case of Russian Immigrants in Israel in the 1990s’, Work and
Occupations 30.1 (2003): 3-29.
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Sibylle Heilbrunn and Ivan Diego Rodriguez
Wrong-Headed Assumptions, Unintended Outcomes
__________________________________________________________________
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Sibylle Heillbrunn, Ph.D., is Professor for Organizational Sociology and holds
currently the position of Dean of School of Social Sciences and Humanities at
Kinneret Academic College in Israel. Her research focuses on entrepreneurship and
on forms of organizational behavior including perspectives of diversity and multiculturalism.
Iván Diego Rodriguez is the Project Manager at Valnalon, a government agency
commissioned to develop the regional strategy on enterprise education in Asturias
(Spain). His main research interests are critical theory of entrepreneurship and
enterprise education in particular, with a special focus in the politics associated
with it and issues related with processes of transfer, appropriation and reactions to
prevailing discourse among the teaching community and society as a whole.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
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163
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Appendix
Table 1: Quantitative results of course survey
Teacher
Subject
A
Branding and positioning of
consultants – Case Studies
Diagnostic
procedures
of
business mentoring
Financing
Sources of funding
Import and export
Contracts and
types of
associations
Consulting approaches
Restaurants, coffee-shops and
bars
Accounting and tax services
The start-up process
Management of employees
Cost accounting and balance
sheet
Workshop: Who am I?
Marketing and selling
Tools of profitability
Psychology of the consultant
and the business owner
SME support systems in Israel
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
February 2011
N
Mean SD
-
August 2011
N
Mean
15
4.9
SD
.2
18
4.4
.7
18
4.8
.3
18
18
18
4.3
4.5
4.3
.7
.6
.8
17
17
18
-
4.1
3.9
4.3
-
.9
.8
.5
-
18
-
4.2
-
.8
-
18
4.2
.7
18
18
17
4.0
3.5
3.8
.9
.5
.6
18
18
18
4.1
3.2
3.6
.9
.6
.7
18
17
16
-
3.7
3.6
3.7
-
.8
.8
.7
-
17
16
3.5
3.2
.6
.5
-
-
-
18
3.7
.6
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
Sibylle Heilbrunn and Ivan Diego Rodriguez
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.
© 2016. Inter-Disciplinary Press. Author watermark copy only. Do not post entire volume. Single chapter only http://www.inter-disciplinary.net.