Rich-to-poor Diaspora Ventures: How Do They Survive?
Abstract
This paper develops a first conceptual understanding of motivations and success/survival factors of ‘rich-to-poor Diaspora Entrepreneurship (DE)’ by focusing on an individual’s cultural intelligence and learning ability. Rich-to-poor DE addresses entrepreneurial activities conducted in developing or emerging countries by diasporans originated from developed ones.
Despite the growing research interest in the phenomena of DE and its increasing importance for societies and economies in the last decades, previous researchers have almost solely focused on entrepreneurship by diasporans whose country of origin is an emerging or developing one (‘poor-to-rich DE’). This type of DE has been considered to be driven mainly by necessities, an outcome of the lack of financial and economic alternatives in their home countries (Cohen, 1997). Evidence from business practice, however, shows the existence and significance of rich-to-poor DE (e.g. Elo, 2013; Horiuchi, 2010). The aim of this paper is to clarify the difference between rich-to-poor DE and poor-to-rich DE and to develop research propositions as for motivations and success/survival factors of this type of entrepreneurship based on cultural intelligence theory (Earley, 2002) and learning theory.
Introduction
In recent years, entrepreneurial activities of diasporans have attracted increased research attention. Diasporans and their descendants are migrants who maintain a relationship to their country of origin (COO) (Safran, 1991). These people are in a special cultural constellation, being embedded in multiple cultures and societies of different countries (Drori, Honig, & Wright, 2009). Unlike the conventional image of immigrants who are losing their connection to their COOs gradually over time and generations, one of the significant characteristics of diasporans is their persistent sense of home country orientation (Brubaker, 2005). The diaspora phenomenon is of growing societal, political and economic significance, since the number of diasporans worldwide has been drastically increasing and their economic activities go beyond national borders. One of the facilitators of the increase of diaspora population is the rapid development of communication and transportation technology in the last decades which has made it easier for them to maintain the relationship to their home country, even though they live for a long time outside of the country they originate from.
Diaspora entrepreneurship (DE) comprises the entrepreneurial activities which are carried out in a transnational context and initiated by actors who are embedded in at least two different socio-cultural and economic arenas (Drori, Honig, & Wright, 2009). Compared to other types of entrepreneurship, DE comprises idiosyncratic advantages as well as disadvantages caused by its transnational nature. Since their business activities cover two or even more countries, they are more likely to encounter difficulties driven by liabilities of foreignness (Terjesen and Elam, 2009; Zaheer, 2002) and institutional constraints in several countries (Yeung, 2002). In spite of these disadvantages, some of previous literatures suggest that these entrepreneurs who undertake cross-border activities have unique resources with a positive impact on their business success such as diaspora networks (Kuznetsov, 2006). Besides this, their often global mindsets, their creativity, imagination and intuition put them into a more favorable position. In this vein it is also possible that their international profile is to some extent perceived as a market-relevant asset in their country of residence (COR). This plugs in the notion of ‘assets of foreignness’ as portrayed by Nachum (2010) and Freiling and Laudien (2012).
DE is highly heterogeneous due to the idiosyncrasy of the people founding such businesses. There are different possible dimensions subclassifying diasporans such as motivations for becoming diasporans (Cohen, 2008) or socio- economic and educational background (Leinonen, 2012). The degree of economic development of COO and COR is regarded as an important dimension for diaspora classification. For instance, diasporans originating from a developing country who become diaspora entrepreneur in a developed country (poor-to-rich DE) are different from those from a developed country who establish their business in a developing or an emerging economy (rich-to-poor DE) in many aspects (Elo, 2013). While their decision for immigration in case of poor-to rich DE is most likely driven by financial reasons such as lack of vocational alternatives in their COOs in the former case, ‘rich-to-poor diasporans’ have obviously more alternatives in their home market – and elsewhere. Therefore, it can be considered that their motivation to become diaspora entrepreneur is different than that of the former group. Despite of high degrees of heterogeneity of DE, previous
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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.