The Embedding of Transnational Entrepreneurs in Diaspora Networks: Leveraging the Assets of Foreignness.
| Verfasser | Stoyanov, Stoyan |
| Posten | RESEARCH ARTICLE - Report - Abstract |
1 Introduction
International business research shows that firms operating outside their home countries face additional costs of conducting business activities (resulting, for example, from a lack of local institutional and business knowledge), commonly described as liabilities of foreignness (LOF)--costs that native actors do not usually incur (Hymer 1976; Zaheer 1995; Petersen and Pedersen 2002; Baik et al. 2013). Recent research, however, also points to the benefits that may result from foreignness, inviting us to view foreignness not only as a liability but also potentially as an asset (Nachum 2010b; Denk et al. 2012; Joardar et al. 2014). While the discussion on the assets of foreignness has been growing, scholars have only begun to investigate the scenarios in which positive or negative outcomes will prevail as a result of foreignness (Joardar et al. 2014). Some work investigating when foreignness is an asset, like that of Nachum (2010b), focuses on multinational enterprises (MNEs), but work in this vein focusing on the entrepreneurial ventures of immigrant entrepreneurs is still limited.
With this gap in mind, we investigate the conditions in which foreignness emerges as a valuable asset for transnational entrepreneurs (TEs) of micro and small enterprises. TEs have been defined in the literature as a subset of immigrant, ethnic entrepreneurs who, according to Drori et al. (2009, p. 1001), "migrate from one country to another, concurrently maintaining business-related linkages with their former country of origin and currently adopted countries and communities".
This study builds upon research showing that learning about the specificities of the market and the environment is crucial for starting companies, because this knowledge allows entrepreneurs to locate and exploit business opportunities, as well as to develop operational efficiency (Penrose 1959; Spender and Grant 1996; YliRenko et al. 2001). In accordance with this notion, various studies have suggested that interorganizational affiliations generate knowledge acquisition and operationalization prospects (Dyer and Singh 1998; Lane and Lubatkin 1998; Larsson et al. 1998; Chetty and Holm 2000). Even though inter-organizational learning in a group setting has been viewed as essential for the successful operations of foreign companies, there is still a dearth of empirical qualitative studies scrutinizing the dynamics of learning in international business (Keupp and Gassmann 2009; Fletcher et al. 2013). This gap is even deeper within the context of the assets of foreignness literature, which welcomes further insight on the dynamics of how firms operate within networks (Denk et al. 2012).
Furthermore, although researchers have utilized traditional sociological approaches to examine entrepreneurial assets of specific ethnic groups (Fairlie and Meyer 1996; Dimitratos et al. 2016), the effects of transnationalism and the interplay between social, human and financial capital from home and host countries within ethnic groups remains largely unexplored but of significant importance (Ilhan-Nas et al. 2011). Prior research has shown that entrepreneurs' transnationalism has resulted in new forms of cosmopolitan identity, which is still foreign in nature when compared to host countries' identities (Wong and Ng 2002). Thus, it is a worthwhile endeavor to empirically reexamine the older notions of foreignness in light of the contemporary transnationalism pressures (Kloosterman and Rath 2001). Given that "the forms of transnationalism can be expected to vary significantly according to the nationality of the immigrant and the context of reception in ways that are currently not well understood" (Ilhan-Nas et al. 2011, p. 624), this study examines how TEs capitalize on their foreignness within a specific context, that of diasporas.
TEs operating in the locus of ethnic diasporas (the context where links and ties between home and host counties are maintained) are an excellent subject for researching how individuals capitalize on their foreignness within a transnational network. Looking at young companies and their intangible resources within the diaspora context (that is relationships and knowledge), as well as the way those resources are utilized, makes it possible to highlight the role of individuals (entrepreneurs) in turning foreignness into an asset. For these entrepreneurs, the diaspora network in which they embed themselves is not merely context--it is crucial to how their foreignness becomes an asset. According to Safran (1991), diasporas are defined as ethnic spaces characterized by a memory or a vision about, and commitment to, the home country, combined with a continuing relationship with the host country. However, since not all diasporas share the same dual identity trait (Radhakrishnan 2003), the characteristics of the transnational communities that facilitate the transformation of foreignness into an asset also deserve attention.
We look at foreignness on the individual level, as this is essential to the better understanding of organizational foreignness, especially in small entrepreneurial ventures (Joardar et al. 2014). In addition, the individual level of analysis allows us to probe the established understanding that foreign nationals are often observed to be in an unfavorable position when compared to the locals of the host country, due to their socio-cultural differences, lack of network embeddedness, and access to information (Jun et al. 2001; Joardar and Wu 2011). We believe that the tendency to associate liabilities with such characteristics as foreignness or outsidership arises almost by definition, because these characteristics define actors in terms of what they are not (or what groups they do not belong to) rather than what they are or what they do belong to--a negative, rather than a positive, identity. We will present evidence that changing our lens and defining the Bulgarian entrepreneurs we studied in a more positive sense--in terms of their "Bulgarianness" rather than their foreignness--points us clearly in the direction of the assets associated with their national identity.
This paper is a qualitative study of Bulgarian TEs operating in the UK, focusing on how these actors capitalize on their ethnic identity to gain access to a diaspora network, the Bulgarian diaspora, that incubates skills and capabilities that enable them to operate in a new and strange environment, namely the host country (the UK). We observe three assets of foreignness within this context. The first is a transnational network nurturing knowledge utilization and development of essential capabilities, accessible to only a relatively narrow group of actors. The second are the abilities of these entrepreneurs to enter this network and to bridge the home (the Bulgarian) and host (the British) market while operating within the diaspora community (ethnic spaces in the host country). The third consists in a unique mentoring environment found within the diaspora network that helps newer TEs learn from incumbents in the community how to apply knowledge gained from old experiences to the new situations in which they find themselves. This leads us to identify what makes the diaspora network such a valuable asset for the entrepreneurs who are able to join it and gain the trust of its incumbent members: its transactive memory (Argote 2015).
This paper adds to the ongoing discussion on assets of foreignness and also serves as a response to the call by Drori et al. (2009, p. 1016-1017) for research into how "TEs dynamically engage in imposing, demanding, resisting, and altering forms and strategies of business creation and development, controlling and manipulating their respective environments". The observed ability of these actors to control and manipulate the host country environment reveals an important deviation from the established understanding that foreign nationals are in an unfavorable position.
Our paper proceeds as follows. We discuss the literature on the liabilities of and assets of foreignness and outsidership. We then present our methods and findings. The final section contains a discussion of the findings and conclusions.
2 Research Background
2.1 Ethnic and Transnational Entrepreneurship
The majority of research on international entrepreneurship examines three main types of businesses: "born global" companies, which internationalize at the moment of, or soon after, start-up (Madsen and Servais 1997; Knight and Cavusgil 2004; Lu and Beamish 2001); "born-again global" companies that internationalize after gaining competences and market share in the domestic market (Bell et al. 2003), and traditional large companies that internationalize gradually as a response to factors in the domestic and the global macro environment (Fernhaber et al. 2007). Although distinct streams have already emerged in international entrepreneurship research (Zucchella and Scabini 2007), some areas have largely escaped the attention of researchers despite their significance in the cross-national context. Transnational entrepreneurship is one of these.
As mentioned in the introduction, TEs constitute a subset of ethnic entrepreneurs. Broadly, ethnic entrepreneurs are immigrant entrepreneurs, generally treated as focusing on the domestic market; while they usually cater primarily to members of the same ethnic group (often occupying niche positions within ethnic enclaves), they may appeal to the broader community as well. They typically benefit from various forms of mutual support based on their membership in the local ethnic community (Auster and Aldrich 1984), and a number of authors have observed the existence of an "immigrant effect", which refers both to the tendency of immigrants from at least certain ethnic groups to engage more frequently in entrepreneurship than the population at large, and to the role that immigrants play in facilitating FDI into their mother countries by...
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