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researchers have, however, predominantly focused on the economic and entrepreneurial activities initiated by poor-to- rich diasporans who move to richer countries seeking for a higher quality of life or better career opportunities. Originating from developed economies and giving up their career opportunities in their COO, however, is a still under-researched, yet empirically observable topic. What is particularly unknown is rich-to-poor diasporan’s motivation and their entrepreneurial activities. Why do these people voluntarily leave their COO in face of uncertain conditions in the targeted COR? What are the enabling factors of successfully implementing this sort of entrepreneurship in terms of corporate survival? This paper responds to these research questions by focusing unique cultural as well as learning competencies of diasporans on the individual level. Our study contributes to diaspora, opportunity and intercultural interaction theories by establishing a first theoretical understanding of rich-to-poor DE with regard to their motivations and success/survival factors.
The structure of this paper is as follows: first the conceptual background will be presented along with diaspora entrepreneurship, cultural intelligence and learning theory. Second, the methodology applied to this paper will be briefly introduced. Third, based on the theoretical background we will develop research propositions in regard of the motivation of rich-to-poor diaspora entrepreneurs and success factors which are related to their individual competencies. Finally, an outlook will be presented.
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in their COO. To sum up, the contribution to their COO that diasporans make is often sigfinicant. Huang and Khanna (2003) maintain that without the diaspora contribution, the rapid economic development China and India have experienced in the last decades would have not been realized.
In the previous literature, DE has been observed from various perspectives both on macro and micro level.
General macro environmental conditions with an influence on DE have been identified. Diasporans operate in two environments (COO and COR) and they are very different in terms of their level of development, political and legal aspects, socio-cultural dimensions, and technological development (Nkongolo-Bakenda & Chrysostome, 2013). Living in two different contexts require diaspora entrepreneurs a high degree of flexibility. Newland and Tanaka (2010) identified six factors which foster DE both in COO and COR: (i) strong economy, (ii) diaspora engagement policies (e.g., tax breaks, training centers, and educational institutions), (iii) good governance (low level of corruption and well- functioning public institutions), (iv) access to financial capital (good jobs, status, and loans), (v) favorable perception of entrepreneurship, and a (vi) a critical mass of human and social capital. Besides these factors, previous researches on institution have provided substantial understanding of this phenomenon on the macro level. Since diaspora entrepreneurs are embedded in multiple institutional environments, they must surmount the institutional constraints of two or more localities (Yeung, 2002). Drori et.al. (2009) argue that diaspora entrepreneurs are not simply passive adherents to institutional constraints, but actively mold them to suit their own unique initiatives. Riddle and Brinkerhoff (2011) regarded diaspora entrepreneurs as institutional agents who experience new institutions in COR and change the institutional environment of their home country. The emerging of diaspora in the COR is regulated by immigration policies. In addition, it has been widely discussed how economic activities of diasporans influence policy making of the COO. As previously discussed, DE has substantial positive impacts on their COOs in regard of homeland investment and knowledge transfer. There are also positive effects for COR. For this reason it is naturally a momentous issue for policy- makers how to develop favorable environment for diasporans (Talib, et al., 2012).
On the micro level, motives to become diaspora entrepreneurs as well as various factors which influence DE from the resource and capability perspectives have been discussed. Recent literature on DE has been inconclusive with regards to their motivations. Even though various motivations can be named, they are categorized in mainly two groups: business opportunity and some sort of homeland sentiments (Lin and Tao, 2012). Especially the altruistic character of motivations for DE has attracted considerable attention (Gillespie et.al., 1999; Nielsen and Riddle, 2010).
When entrepreneurial activities are driven by opportunities, it is opportunity entrepreneurship. This type of entrepreneurship can be further distinguished as improvement-driven opportunity entrepreneurship, when entrepreneurs additionally seek to improve their income (Xavier et.al., 2012). While these two factors can be seen as pull-factors, there are also push-factors for diasporans to become entrepreneurs. Diasporans face often difficulties with career chances in COR in comparison to local population for several reasons: first, they experience cultural or linguistic problems in COR. This happens more likely when the culture and the language of COR are different from that of COO to a large extent. Second, academic and vocational qualifications they acquired in their COO are often not acknowledged properly in COR and therefore they are often forced to work in an underqualified position. This sort of qualification problems are relevant not only to diasporans from developing or emerging companies whose educational institutions are not as established as in developed countries but also to those from developed countries.
For instance, many North American immigrants have no choice but becoming English teachers in Finland, since their American qualifications are undervalued (Leinonen, 2012). Third, diasporans often encounter so-called ‘glass ceilings’ in the course of their career, even though they perform as well as local employees at companies (Lin and Tao, 2012). For these reasons, diasporans may become self-employed in COR due to the lack of available vocational opportunities.
Besides motives for DE, a number of factors on the individual level have been identified by previous researchers.
While various perspectives influencing DE, recent research has illuminated the significance of networks in entrepreneurial constellations of diasporans. The network diasporans organize or utilize is diversified: host, home, and the commonly called ‘diaspora network’ as well as social and entrepreneurial networks (Kuznetsov, 2006). Recent researchers have focused on this diaspora network as a unique entrepreneurial resource of diasporans and a possible success factor (Kuznetsov and Sabel, 2005, Saxenian, 2000). This kind of network, which is called diaspora network, offers various resources which advantage diasporans’ economic activities such as labor from migrant pools at competitive cost, market-related information, suppliers, technologies and business practices (Light, Bhachu & Karageorgis, 2003).
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Until now, mainly Chinese, Taiwanese and Indian diaspora networks, such as Chinese diaspora networks in Silicon Valley and Taiwanese venture capital in the United State, have been researched (Saxenian, 2000; 2002; Saxenian and Hsu, 2001). Diaspora networks also offer chances to diaspora members to see role models of former diaspora entrepreneurs. Having entrepreneurial role models is usually associated with a positive predisposition toward entrepreneurship, concretely for ethnic entrepreneurs (Toledano and Urbano, 2008). In addition to the three network factors which diasporans are involved in, family social capital has been named by some researchers as one of the influencing factor to DE. The family plays a supportive role when diasporans establish and operate small businesses. The family can be also seen as potential financial capital for DE (Sanders and Nee, 1996).
Even though various researches on DE have been conducted in the last decades, previous research has not succeeded to ascertain the full scope of this phenomenon, since it is highly heterogeneous. The dimensions that classify diasporans are diverse. For instance, diasporans can be grouped after their educational level. Unlike uneducated migrants, the highly qualified migrants, who are generally called ‘elite migrants’, are not seen as economic or social threats for the CORs (Leinonen, 2012). Therefore, immigration laws of many European countries provide for preferential treatment for elite migrants (Gropas & Triandafyllidou, 2007). Cohen (2003) classified diasporans by their nature of migrations: victim diasporas (Africans and Armenians), labor and imperial diasporas (indentured Indians and the British) and trade and business diasporas (Chinese and Lebanese). Another dimension for diaspora classification is the level of economic development of COO and COR. Elo (2013) made a categorization of diaspora entrepreneurs following the grade of economic development of COO and COR (Table 1). According this table, diaspora entrepreneurs are classified into nine groups by the level of economic development of COO and COR (developing, emerging and developed countries). The majority of previous researchers observed entrepreneurial activities in developed countries operated by diasporans either from developing or emerging countries. One of their primary motives for immigration is generally seeking for realizing a better life. We call such kind of entrepreneurial activities ‘Poor-to-rich’ DE. This type of DE has been regarded as necessity entrepreneurship, an outcome of the lack of financial and economic alternatives in their home countries (Cohen, 2003). Evidence from business practice, however, suggests that there are also people from developed economies in which an attractive employment market is given and higher levels of living standard are realized, courageously leaving their home country for living in an economically less developed country for founding a new business. E.g., Elo (2013) reported a case of German entrepreneurs in her narrative study about entrepreneurs from various nations in Uzbekistan. Horiuchi (2010) researched Japanese entrepreneurs in China in his ethnographic study. We call the entrepreneurial activities in developing or emerging economies operated by diasporans who are originated from developed countries ‘Rich-to-poor’
DE. To date, this type of entrepreneurial activities has been neglected by previous diaspora research.
TABLE 1: TYPES OF DIASPORA ENTREPRENEURSHIP
Source: Elo (2013)
Since evidence and propositions from prior research are found based on the poor-to-rich DE, it is essential to explore whether and to what extent they are appreciable to the case of rich-to-poor DE. The initial situation and
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environment of rich-to-poor diaspora entrepreneurs are fundamentally different from that of the poor-to rich type.
While economic and market situations in COO are less attractive compared to COR in the case of poor-to-rich DE and this economic gap largely justifies their strong motivations to move to a richer country and become entrepreneur, people from developed countries must have other reasons to leave their home country which offers attractive economic conditions and career opportunities to realize an adequate standard of living. It is also questionable, whether homeland sentiments (Lin and Tao, 2012), one of the pull factors for DE, which previous research has identified, can explain their motivation to become rich-to-poor diaspora entrepreneurs.
Despite of the findings from many studies that emphasize the role of diaspora network as an important resource (Kuznetsov, 2005; Saxenian, 2000; Dutia, 2012), actually there is very little empirical evidence, in what way and how intensive host-country based diaspora networks are relevant to entrepreneurial activities of rich-to-poor diasporans. Whether these diaspora networks are crucial in this case is questionable for mainly three reasons. First, the total number of diasporans from developed countries is smaller, since they experience generally no financial pressure to leave their country – compared to diasporans from developing or emerging economies. Therefore, the availability of such comprehensive diaspora networks is not comparable to that of Chinese or Indian ones. Second, rich-to-poor diaspora entrepreneurs are often aware of different ways how to develop a new business based on similar solutions in different settings. Insofar, they have often not only more resources and competences available compared to poor-to-rich DE but also blueprints of working business models in mind. Third, a large portion of the population in developed economies has often a rather cosmopolitan lifestyle where the role of tradition and religion is not of great significance. In such cases diaspora networks, which require intensive contributions of members and where shared uniqueness of cultural values and norms compared to these of the COR is essential, do not have the comparable relevance to them. Therefore, it seems possible to assume that rich-to-poor DE does not rest so much on the host country based diaspora network factores compared to poor-to-rich ones. Instead, it is implicitly assumed in extant research that the individual per se possesses crucial capabilities for cross-cultural contexts (Hart, 1974; 2011) and plays therefore an important role as a success factor also in diaspora business. For this reason, we focus on individual capabilities and experiences of diasporans to explore factors influencing the success of this sort of entrepreneurship.
This paper attempts to conceptualize the success factors of this kind of ventures in the light of cultural intelligence (‘CQ’) theory (Van Dyne, Ang, & Livermore, 2010, Earley & Mosakowski, 2004) in connection with learning theory (Cohen and Levinthal, 1990; Baron, 2004; 2006; Ardichvili et.al., 2003).
Cultural Intelligence (CQ) Theory
While a number of ideas of different intelligences such as social intelligence (Vernon, 1933), emotional intelligence (Goleman, 1996; Salovey and Mayer, 1990) have received extensive attention, these intelligences failed to include cultural dimentions and are not necessarily fully applicable in contemporary cultural situations (Earley and Ang, 2003) and diaspora settings. Due to their multiple cultural embeddedness, diasporans operate in culturally demanding situations in comparison to other types of entrepreneurs. Therefore, it is assumed that diaspora entrepreneurs are required to have unique capabilities to handle culturally challenging situations. CQ is helpful to understand why some individuals are more effective than others in dealing with situations that are culturally diverse (Ang, Van Dyne, and Koh, 2007). While most people meanwhile know the importance of intelligence quotient (IQ) and emotional intelligence (EQ), one’s ability to lead and interact with effective emotional sensibilities, as measurement of one’s capability in business environments, CQ has attracted attention as a new criterion for one’s intelligence that can not be explained by IQ and EQ. CQ addresses one’s intellectual capabilities to cope with intercultural settings and challenges. CQ is defined as an individual’s capability to effectively deal with situations characterized by cultural diversity (Earley and Ang, 2003).
Its general structure consists of three facets including cognitive, motivational and behavioral elements (Earley, 2002). According to Earley (2002), CQ reflects cognitive processing capacities in various ways. Thereby two factors play a significant role: cognitive flexibility and reasoning skills. Cognitive flexibility is critical to CQ, since people are required to constantly reshape and adapt themselves to understand new setting in new cultural sitatuion. In order to build higher maturity levels of CQ, strong reasoning skills are also essential, since a person attempts to make sense of a meaning of significant cues in the environment by means of inductive reasoning, when they come into situations which can not be judged based on their own cultural criteria. Another important aspect of cognitive
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functioning in connection with CQ is a person’s metacognition. Metacognition refers to thinking about thinking, or knowledge about cognitive objects (Flavell, 1987). Metacognition is critical, as one is required to bring together patterns into a meaningful picture without knowing what the right picture might look like. Possessing (meta-)cognitive capabilities is not sufficient. One must be motivated to use this capability and produce a culturally appropriate response. While cognitive CQ refers knowing what and how to do and motivational CQ refers to having the wherewithal to persevere and exert effort, the third facet of CQ, behavioral CQ, relates to responses to a given situation based on one’s behavioral repertoire (Earley and Ang, 2003). Earley (2002) argues that a person with a high CQ has a propenstiy to determine where new behavioral patterns are needed and how to execute them effectively in new cultural contexts. Based on the theoretical concept of CQ, this paper will explore diasporans’ cultural capabilities and develop relevant research propositions.
Learning Theory
Since diasporans’ cultural knowledge and capabilities change and evolve as they are influenced by learning, taking particular note of learning capacities on the individual level of diasporans provides also a certain understanding of success of rich-to-poor diasporans’ businesses. Diasporans are embedded to a certain extent in social institutions of their origin and home societies (Drori, Honig, & Wright, 2009). Their double interconnectedness in two different
‘worlds’ provides them, consiously or not, with a diverse cultural background which may be related to their ability to learn external knowledge. For the purpose of exloring diasporan’s learning ability, we first discuss their absorptive capacity. Absorptive capacity is defined as the learning ability to recognize the value of new, external information, assimilate it, and apply it to commercial ends (Cohen and Levinthal, 1990). Cohen and Levinthal (1990) argue that mainly two factors influence on absorptive capacity: prior related knowledge and the diversity of the background. Due to the cumulative character of learning processes, people can learn more efficiently when learning objects are related to their prior knowledge. Along with prior knowledge, diversity of the background plays also a significant role for one’s learning. When uncertainty regarding the knowledge sphere exists where potentially useful information might emerge, possessing a diverse background increases the possibility that incoming information will be related with a part of their knowledge. This enhances the efficiency of learning. In the section of research propositions, we will discuss diasporan’s learning capabilities based on their absorptive capacity and how they influence on the success or suvival of rich-to-poor DE.
Methodology
This is a conceptual study which reviews and develop the theoretical discussion on motivation as well as success factors of DE by employing a novel synthesized perspective. While there are indications for the importance andrelevance of rich-to-poor DE (Flisi and Murat, 2011), the factors of successfully running these businesses are largely unknown. There are partial explanation for some aspects, but yet there is no study available focusing on these success factors. Therefore, we build on prior research on successfully implementing new ventures as well as on research on migration entrepreneurship or poor-to-rich DE, respectively. The object of interest is the individual, the diaspora entrepreneur, and the endogenously generated success factors. For developing a first understanding of the particular profile of rich-to-poor DE and the drivers of corporate survival of this type of new ventures we employ a theoretical lens. This lens is informed by theories of cultural intelligence (Earley & Mosakowski, 2004) and learning theory. Cultural intelligence theory (Earley & Ang, 2003) is chosen to address the capacities of people and organizations to deal with different and often complex intercultural environments. Individuals’ absorptive capacity theory (Cohen and Levinthal, 1990) is chosen to address the learning ability which outcomes measures (e.g. corporate survival) of rich-to-poor DE. They allow a deeper understanding of the cognitive dimension of establishing these ventures. These theories provide us with potentially relevant cause and effect structures that help in explaning corporate survival regarding DE. Corporate survival as explanandum is chosen as an adequate indicator of new venture performance (Chrisman et.al., 1999; Freiling, 2012). The aim of this paper is developing research propositions on the motivations for DE as well as the factors influence corporate survival, while pinpointing assumptions on the differences between poor-to-rich DE and rich-to poor ones. Insofar, the design of this paper is explorative and conceptual.