Academic journal article South Asian Journal of Management

Returnee Entrepreneurs: Bridging Network Gaps in China after Absence [Dagger]

Academic journal article South Asian Journal of Management

Returnee Entrepreneurs: Bridging Network Gaps in China after Absence [Dagger]

Article excerpt

Improved market opportunities in China and government led policies entice talent away from their host countries to return to their home country. We study Returnee Entrepreneurs (REs) in the high-tech sector and use network theory to probe their social ties enabling new firm formation. Data collection rested on a comparative case study using in-depth interviews with 10 REs. Analysis indicates that direct entrant REs (i.e., those who formed a firm immediately upon return) relied on their strong ties with family and friends, whilst abroad, to substitute weak ties with the government to access resources for new firm formation prior to their return. Indirect REs (i.e., those who sought employment prior to forming a new firm) validated their idea through strong education ties whilst abroad but did not exploit strong family ties at home because they provided little leverage to resource providers.

Key Words: China, New Firm Formation, Returnee Entrepreneurs, Social Network Theory, Strong Ties, Weak Ties


Historically and geographically, migration and movements of peoples across borders from resource poor to richer climes is well documented (Gmelch, 1980). Population shifts have generally been viewed as one way traffic but more recently we have experienced a 'calling home' of migrants, away from their adopted host country. China offers an interesting example especially in respect to returnee talented people and entrepreneurs (Wang, Zweig and Lin, 2011; Zweig and Wang, 2013). The call has been influenced by improved market opportunities within the home country and by government led policies encouraging talent to return to help boost the economic standing of the returnees' home country (Zweig, Chung and Vanhonacker, 2006). In this paper we explore 'how' Returnee Entrepreneurs (REs) leverage their social ties for new firm formation after a period of absence from their home country, probe what kinds of network relations they report (i.e., strong or weak ties) and identify 'why' and 'what' they are important for.

Following previous studies we define REs as those who have lived in a developed OECD country, received education outside their home country, and / or have working experience from the host country, and / or may have opened a business in their host country prior to returning to their own home country (Guo, Porschitz and Alves, 2013; Liu, Lu and Choi, 2014; Pruthi, 2014; Saxenian, 2006; Wright, Liu, Buck and Filatotchev, 2008). Our study specifically looks at Returnee High-tech Entrepreneurs (Wright, Liu, Buck and Filatotchev, 2008) who form new firms in a second tier city in China, Zhejiang province, called Ningbo. We see the entrepreneurship process as one embedded in context and where the behavior of individuals is embedded in networks of relations. An individual entrepreneur's network might, therefore, be varied in order to access different types of resources for new firm formation and have to include tangible and intangible resources, knowledge, advice and guidance gained from weak or strong ties (Granovetter, 1973; Li, Zhang, Li, Zhou and Zhang, 2012).

On strength of ties it has been concluded that weak ties are much more important at the firm formation phase (Batjargal, 2007) because the structural holes (i.e., the disconnections between non-redundant contacts in a network) facilitate access to information and opportunities from brokering opportunities between disperse ties (Burt, 1992; Nahapiet and Ghoshal, 1998) (i.e., they have a bridging effect to knowledge acquisition) (Guo and Miller, 2010). Strong ties (i.e., binding connections or cohesive ties between contacts in long term relationships), on the other hand, associated with family, friends, former colleagues, industrial contacts, etc. (i.e., direct, personal contact and frequent) might be deemed fundamentally important on the entrepreneur's return, after a period of absence (Drori, Honig and Wright, 2009). Notwithstanding, strong tie networks have also been negatively associated with collusion and corruption (Sun, Mellahi and Wright, 2012; Peng and Zhou, 2005). …

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