When Do Return Migrants Become Entrepreneurs? How Cultural Barriers Temper Individual Advantages

• In Event: 214 - Regular Session. Economic Sociology 1

Abstract

Returnee entrepreneurs are widely lauded as catalysts of economic growth in their home countries. Despite this consensus, little research gives insight into the factors that influence return migrants to transition into entrepreneurship after coming back to their homelands. Research in entrepreneurship on human capital and social networks suggest that returnees who gain more valuable skills and social capital from working abroad are better positioned than other returnees to found new ventures in their home countries. I argue that variation in home country cultural orientation toward uncertainty avoidance can temper the positive influence of such resource endowments gained abroad on entrepreneurial entry among returnees. Analyzing original survey data on 3,840 respondents, all of whom had worked in the U.S. before returning to one of 98 home countries, I find that returnees are less likely to found businesses after re-entry when they return to countries associated with higher uncertainty avoidance. Furthermore, the positive effects of 1) gaining greater creative skills abroad, 2) maintaining stronger overseas ties, and 3) working abroad alongside peers with entrepreneurial experience on a returnee’s own entrepreneurial transition diminish as the level of uncertainty avoidance in a home country increases. I use a natural experiment to test the robustness of my results to selection effects.

Author

• Dan Wang, Columbia University