The role of diaspora investors in developing countries: A study of firm internationalization and inter-firm collaborations (The role of diaspora investors in developing countries)

Abstract:

Although the relevance of diaspora members as foreign investors in their countries of origin is recognized, their role in the development and success of the firms in which they invest is mostly ignored. The proposed project aims to understand how firm internationalization and inter-firm collaborations are affected by diaspora investor ownership. First, building on organizational learning theory, we propose that minority diaspora owners can facilitate domestic firms’ decisions about FDI through the provision of specialized knowledge and experience of foreign markets. Second, building on social capital theory, we suggest that diaspora owners compared to other types of foreign owners, positively affect the number and success of foreign-owned firms’ collaborations in the host developing country. However, in this regard, regional differences in the host country matter, and the benefits associated with diaspora ownership are reduced in presence of strong local institutions.